US gift tax, explained

What counts as a gift?

The IRS describes a gift as any transfer to an individual, directly or indirectly, where full consideration — measured in money or money's worth — isn't received in return. Selling something to a family member for less than it's worth can include a gift of the difference.

Who pays gift tax?

The donor is generally responsible for paying any gift tax and filing any gift tax return. Under special arrangements the recipient may agree to pay instead — review that with a tax professional.

Gifts that generally aren't taxable gifts

• Gifts of a present interest (something the recipient can use now) that are not more than the annual exclusion ($19,000 per recipient for 2026). Future-interest gifts, such as many gifts in trust, don't qualify — have a qualified tax professional review them.
• Tuition paid directly to the school, or medical expenses paid directly to the provider. Giving the person money to pay the bill, or reimbursing them, doesn't qualify for these exclusions.
• Gifts to your spouse (if your spouse is not a US citizen, different limits apply — ask a qualified tax professional).
• Gifts to a political organization for its use.
• Gifts to qualifying charities, which are deductible for gift tax purposes.

Annual exclusion and lifetime exclusion

The annual exclusion ($19,000 per recipient in 2026) resets every year. The lifetime basic exclusion ($15,000,000 in 2026) is a separate, much larger amount shared between lifetime gifts and the estate. Reporting a gift, using part of the lifetime exclusion, and owing tax are three different things. These amounts describe the rules for US citizens and residents; donors who are not, and cross-border gifts generally (including foreign-gift reporting), should get review from a professional familiar with cross-border gift tax.

If you received a gift

In most cases, property you receive as a gift isn't included in your income. Income generated by gifted property, such as interest, dividends or rent, is generally subject to income tax, although exceptions can apply. Large gifts from foreign persons can have separate reporting rules.

Money versus property

Gifts of property are measured at fair market value, and hard-to-value assets may need a qualified appraisal. If you later sell gifted property, your tax basis generally depends on the donor's adjusted basis, not just the value on the date of the gift.

What this guide covers

This guide covers US federal gift tax for US citizens and residents. Donors who are not US citizens or residents, state rules, foreign tax law, trusts and business gifts follow different rules; a qualified tax professional can review those situations.

Examples

Records to keep

• Who gave, who received, date and value
• Any payment or debt attached to the transfer
• How property values were determined