The IRS Raised the Annual Gift Exclusion to $20,000 for 2027. A Couple With Four Married Children Can Move $320,000 Out of the Estate Every January 1 With No Form and No Tax
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A 74-year-old retired orthodontist and his 71-year-old wife have four grown children, all married. Their estate (a investment account, a paid-off house and a share of a medical office building) comes to about $36 million. Every December he wrote one large check to each child from his own account and figured the planning was done.
This fall their CPA flagged two problems. Each check went over his personal limit, so every year required a gift tax return with his wife’s written consent to split the gifts. And the four in-laws, each a separate recipient under the law, got nothing.
For 2027 the fix is simple: two givers, eight recipients, and $320,000 out of the estate on the first business day of January, with no return to file.
A $20,000 Exclusion for Every Giver and Every Recipient
The IRS released its 2027 inflation figures on Nov. 05, 2026 in Revenue Procedure 2026-35. The annual exclusion for gifts increases to $20,000, up from $19,000 for calendar year 2026.
The rule sits in Internal Revenue Code Section 2503(b)(1): gifts to any person, “other than gifts of future interests in property,” are left out of taxable gifts up to the indexed amount. The limit applies separately to each giver and each recipient, and the law sets no cap on the number of recipients.
The filing rule is in Section 6019. A return is required for any gift except, among others, “a transfer which under subsection (b) or (e) of section 2503 is not to be included in the total amount of gifts for such year.” A gift that remains within the limit triggers no Form 709.
Gift splitting is a different path. Under Section 2513, one spouse’s gift is treated as half from each spouse “only if both spouses have signified” their consent, and that consent is given on the gift tax return. Splitting gets the same result, but it comes with paperwork every year.
Running the 2027 Numbers
- The wife gives $20,000 to each child and each child’s spouse: $160,000.
- The husband does the same from his own funds: $160,000.
- Total moved January 1: $320,000, compared with $304,000 under the 2026 limit.
For 2027, basic exclusion amount for estates is $15,480,000 per person. That comes to $30,960,000 for the couple, if the survivor keeps the first spouse’s unused exemption through a portability election. Their $36 million estate sits above that line, and Section 2001(c) taxes amounts above $1,000,000 on the rate schedule at 40% once the credit is used up.
At 40%, each year’s gifts cut the eventual estate tax by $128,000. Over ten years the couple moves $3,200,000 and saves $1,280,000. Any growth on the given money also builds up outside the estate.
Plenty of families face this tax. In 2024, 7,195 estate tax returns were filed, and 2,663 of them owed a combined $23,313,220,000.
One Checkbook Means a Form 709 Every Year
Under the old practice, the husband covers all eight recipients alone at $40,000 each. Every check is twice his limit. Splitting the gifts means no tax is owed, but a Form 709 with his wife’s consent is due every April. If the return never gets filed, the excess counts as taxable gifts against his lifetime exemption.
What they give matters too. A recipient of given stock takes over “the same” basis the donor had under Section 1015(a), while stock held until death gets a stepped-up basis. Give cash and hold on to the low-basis shares.
Five Moves to Make Before January 1, 2027
- Separate the checkbooks. Each spouse gives from an account they own. Gifts drawn on one spouse’s account create the splitting problem.
- Give outright. Cash put into each recipient’s own account is a present interest. Gifts into a trust need withdrawal rights to qualify for the limit, or a return is due.
- Pay tuition and medical bills directly. Section 2503(e) leaves out payments made straight to a school “as tuition” or to a medical provider. They count on top of the $20,000 gifts.
- Keep a log. Record the date, amount, account and recipient for all eight transfers each year. The executor will need it.
- Check past years. Pull your returns from earlier years. Any year with large checks and no Form 709 needs a late filing that a qualified preparer can handle.
Sixteen Checks and No Paperwork
Two spouses, eight recipients, $20,000 per check: $320,000 leaves the estate every January with no tax and no form. What matters is $1,280,000, the estate tax a decade of these gifts avoids. The limit is one line on a much longer list, and we put the rest of it (beneficiary forms, titling, trusts) in a free estate guide here.
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Vilma Rios is a tax professional, tax researcher, and financial writer with more than 15 years of experience in tax and accounting. Her work spans federal tax research, financial journalism, retirement planning, investment taxation, capital gains, inherited assets, and tax education. She specializes in translating complex tax and financial topics into clear, practical information that helps individuals, families, retirees, and investors make informed decisions.
She has presented tax information through webinars, including Spanish-language tax education, and has appeared on Telemundo 47 discussing tax topics and helping viewers understand important tax-filing requirements.
Her experience also includes tax and accounting work, tax research, IRS-related matters, and public tax education. While in college, Vilma volunteered in an IRS-sponsored tax assistance program and was recognized for her community service by local and state officials.
Known as "Your Tax Geek," Vilma is passionate about making taxes easier to understand and helping people navigate an increasingly complex tax system.
