By Andy L. Gitkind | Gitkind Law Firm | Boulder County Estate Planning
Giving gifts to the people you love is one of the most natural things in the world. But once those gifts reach a certain size, the IRS takes notice. Understanding the gift tax rules—and where things stand now, in 2026—can help you plan generously without any unpleasant surprises.
Here’s a straightforward breakdown of what you need to know this year.
What Is the Annual Gift Tax Exclusion?
The annual gift tax exclusion is the amount you can give to any one person in a calendar year without it counting against your lifetime estate and gift tax exemption—and without any gift tax return being required.
For 2026, that amount is $19,000 per recipient—unchanged from 2025. So if you have three adult children, you can give each of them $19,000 this year—a total of $57,000—with no gift tax implications whatsoever.
If you’re married, you and your spouse can each give $19,000 to the same person, effectively doubling the annual exclusion to $38,000 per recipient per year. This is called gift splitting.
What Happens If You Give More Than the Annual Exclusion?
Giving someone more than $19,000 in a single year doesn’t automatically trigger a tax bill. Instead, the excess amount counts against your lifetime federal gift and estate tax exemption.
For 2026, the lifetime exemption is $15,000,000 per individual. This means you can give away a great deal over your lifetime before owing any actual gift tax. Most families will never reach that threshold.
Gifts above the annual exclusion do require you to file a gift tax return (IRS Form 709) to track how much of your lifetime exemption you’ve used.
What Happened to the 2026 Exemption Change?
You may have heard that the federal lifetime exemption was scheduled to drop significantly at the start of 2026, when the Tax Cuts and Jobs Act of 2017 provisions were due to sunset. The federal government then intervened so that sunset never happened. Instead, they permanently raised the federal lifetime exemption to that current $15,000,000 which will, in fact be inflation adjusted each year, going forward
The bottom line for Colorado families: The extremely high federal lifetime exemption leaves open many opportunities for wealth transfers from generation to generation.
What Are the Best Ways to Give Tax-Efficiently?
Beyond simply writing a check, there are several strategies Colorado families use to transfer wealth efficiently:
- Annual exclusion gifts: Regular giving up to $19,000 per recipient per year, compounded over time, can move substantial wealth without touching your lifetime exemption.
- 529 education accounts: You can “superfund” a 529 by contributing five years’ worth of annual exclusion gifts at once ($95,000 per beneficiary in 2026) and electing to spread it over five years for gift tax purposes.
- Direct payments for tuition and medical expenses: Payments made directly to an educational institution or medical provider are completely excluded from gift tax, with no dollar limit. This is separate from and in addition to the annual exclusion.
- Irrevocable trusts: Gifts into certain trust structures can remove assets from your taxable estate while maintaining some flexibility over how they’re used. This is a more advanced strategy worth discussing with your attorney.
- Charitable giving: Gifts to qualified charities are generally deductible and don’t count against your gift or estate tax exemptions.
Does Colorado Have a Gift Tax?
No. Colorado has no state gift tax or estate tax. The only gift and estate tax considerations for Colorado residents are at the federal level.
Questions to Think Through This Year
Even with the exemption landscape now clearer, thoughtful gifting remains one of the most effective ways to transfer wealth to the people you love. Some questions worth considering:
- Have you made full use of annual exclusion gifts each year?
- Are there family members—children, grandchildren—you’d like to benefit from ongoing gifts?
- Do you have a trust structure in place that still makes sense given the current exemption amount?
- Are your beneficiary designations up to date on retirement accounts and life insurance?
Talk to a Boulder County Estate Planning Attorney
Gift and estate tax planning can feel complicated, but it doesn’t have to. At Gitkind Law Firm, Andy Gitkind has spent over two decades helping Boulder County families understand their options and make decisions that make sense for their real lives—not just their balance sheets.
Gitkind Law Firm, P.C. | 801 Main St., Suite 230, Louisville, CO 80027 | 303-960-6628 | gitkindlaw.com