Gift Tax
A federal tax on transfers of money or property to another person when you receive nothing (or less than full value) in return. The donor — not the recipient — is responsible for paying the gift tax.
The federal gift tax applies to transfers of money or property where you give something of value and receive less than its fair market value in return. It is the donor (the person giving the gift) who is responsible for reporting and, if applicable, paying the gift tax — not the recipient. Gifts between spouses who are US citizens are entirely exempt from gift tax.
The gift tax works in conjunction with an annual exclusion and a lifetime exemption. For 2025, you can give up to $19,000 per recipient per year (the annual exclusion) without any gift tax consequences and without needing to file a return. Gifts to any single person exceeding this amount require filing Form 709, though tax is rarely owed because the excess uses up part of your lifetime unified credit.
The lifetime gift and estate tax exemption is $15,000,000 per individual for 2026 (OBBBA made this base permanent starting 2026, indexed for inflation thereafter), $13,990,000 for 2025, and $13,610,000 for 2024. Taxable gifts (those exceeding the annual exclusion) reduce this lifetime exemption dollar for dollar. Only after exhausting the entire lifetime exemption does any gift tax become payable, at a top rate of 40%. Most individuals will never owe gift tax due to the generous exemption.
Quick Gift Tax Check
2025 annual exclusion: $19,000 per recipient
Related Terms
Annual Gift Tax Exclusion
The amount you can give to any individual each year without gift tax consequences or filing requirements. For 2025, the annual exclusion is $19,000 per recipient.
Estate Tax
A federal tax on the transfer of property at death. The taxable estate is the fair market value of all assets at death minus allowable deductions. The 2026 exemption is $15,000,000 (OBBBA permanent) — up from $13,990,000 in 2025.
Unified Credit
A lifetime tax credit that offsets gift and estate taxes. It shelters $15,000,000 in cumulative taxable gifts and estate value from federal transfer taxes in 2026 (OBBBA permanent), up from $13,990,000 in 2025.