IRC §2503 · 26 U.S.C. §2503
IRC §2503: Taxable Gifts and the Annual Exclusion
IRC §2503 defines taxable gifts — and houses the annual exclusion: inflation-indexed gifts per donee ($19,000 in 2025) that never touch your §2010 exclusion. Present interests only.
What it governs
- Annual exclusion per donee, indexed — $19,000 in 2025
- Present interest required: Crummey powers for trust gifts, no exclusion for futures
- Unlimited exclusion for tuition and medical paid DIRECTLY to the provider
- Exclusion gifts need no Form 709; split gifts and trust gifts do
In the GuideFull treatment in Chapter 16 of the Guide — THE TAX CUTTERY® Guide to Federal Income Taxation, Professional Edition (564 pages, 24 chapters).
Related sectionsIRC §2010 — the lifetime exclusion annual gifts preserve · IRC §1015 — the carryover basis your donee inherits
From the practiceStart the consultation — Paul on video, one question at a time →
Questions this section answers
- How much can I gift tax-free each year?
- The §2503(b) annual exclusion — $19,000 per donee in 2025, indexed yearly — to as many donees as you like, no return required.
- Can I pay my grandchild’s tuition without gift tax?
- Yes, unlimited — §2503(e) excludes tuition and medical paid directly to the school or provider. Reimbursing the student instead blows the exclusion.
- Do gifts to my trust qualify for the annual exclusion?
- Only with Crummey withdrawal powers converting the gift to a present interest — and the IRS polices hollow Crummey notices aggressively.
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