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Gift Tax

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IRS Definition

What is gift tax? Gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.

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Any tax year you give an individual a gift or gifts, that total more than the annual exclusion, you must file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. For 2022, the annual exclusion is $16,000.

Gift tax is typically paid by the donor unless the recipient agrees to pay the gift tax. The gift tax rate for 2022 is between 18 and 40%.

If you are the recipient of the gift, you don’t have to declare the gift as income on your tax return.

Concerned about IRS gift tax? Learn how to handle an IRS audit.

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