Federal Gift Tax Estimator

The annual gift exclusion for 2025 is $19,000 per recipient. You may give this amount to any number of individuals without filing a gift tax return or using your lifetime exemption. Married couples can combine their exclusions to give $38,000 per recipient per year through gift-splitting. Amounts above the annual exclusion reduce your lifetime exemption. Consult a tax advisor before making large gifts.

The federal lifetime exemption covers cumulative taxable gifts and the taxable estate at death. For 2025 the exemption is $13.99 million per individual ($27.98 million for married couples). Gifts above the annual exclusion reduce this exemption dollar for dollar. When the exemption is exhausted, federal gift tax of 40% applies. The exemption is scheduled to drop in 2026, so planning now is important.

You must file IRS Form 709 for any gift to a single recipient that exceeds the annual exclusion ($19,000 in 2025), for gifts of future interests, or for gifts where you elect gift-splitting with a spouse. Filing Form 709 does not necessarily mean you owe tax, it simply reports use of your lifetime exemption. Gifts to spouses or qualified charities are generally exempt from this requirement.

Recipients do not pay income tax on gifts, regardless of the amount. Gift tax, if any, is the responsibility of the donor, not the recipient. However, if gifted property is later sold, the recipient inherits the donor's cost basis, which may result in capital gains tax on any appreciation. Inherited property at death receives a stepped-up basis, which is a key difference between gifting and bequeathing assets.