Gift Tax

The gift tax is a tax imposed on the transfer of assets from one person to another during the giver’s lifetime. It differs from estate tax, which is a tax imposed on transfers that take place after a person’s death. The gift tax is intended to prevent individuals from avoiding estate tax by simply transferring all of their assets as gifts during their lifetime. 

Gift Tax Annual Exclusion/Exemption

Annual Gift Tax Exclusion

Every individual is allowed an annual gift tax exclusion, which allows them to gift a certain amount of money or property each year without incurring gift tax. In 2024, the annual gift tax exclusion is $18,000 per recipient. This means the giver may gift up to $18,000 to as many recipients as they want each year without being taxed. Married couples may gift up to $36,000 per recipient per year without incurring the gift tax. 

Lifetime Exemption

In addition to the annual gift tax exclusion, each individual has a lifetime gift tax exemption that allows them to gift a certain amount of money or property throughout their lifetime without triggering the gift tax. In 2024, that amount is $13.61 million per individual and $27.22 million for married couples.