Gift Tax

Gift tax is a federal tax on the transfer of money, property, or other assets from one individual to another without receiving full value in return. The tax is paid by the giver—not the recipient—on gifts exceeding the annual exclusion amount and counting toward a lifetime exclusion limit. Certain transfers are exempt, including gifts to a spouse, qualified educational or medical expenses paid directly, and donations to charities. If these limits are exceeded, the excess is taxed at rates ranging up to 40%, and reporting is required.