Gift Tax Calculator
Calculate whether your gift triggers federal gift tax. See the annual exclusion, lifetime exemption usage, and estimated tax on large gifts.
How the Federal Gift Tax Works
The federal gift tax applies when you transfer money or property to someone without receiving full value in return. However, most gifts are not taxed because of two key exclusions. The annual exclusion allows you to give up to $19,000 per recipient per year (2025) without any tax consequences or reporting requirements. Married couples who elect gift splitting can give $38,000 per recipient together. Any amount above the annual exclusion counts against your lifetime exemption of $13.99 million (2025). Only after exhausting this massive lifetime exemption would you actually owe gift tax at rates from 18% to 40%.
Annual Exclusion vs Lifetime Exemption
The annual exclusion is a per-recipient, per-year amount that does not require reporting or reduce your lifetime exemption. You can give $19,000 each to as many people as you want every year with no tax impact. The lifetime gift and estate tax exemption is a combined $13.99 million — this is the total amount you can give away during life and at death before any tax is owed. Gifts above the annual exclusion that use your lifetime exemption must be reported on IRS Form 709. These are not taxed immediately but reduce the exemption available at death. The exemption is scheduled to drop to approximately $7 million after 2025 unless Congress extends it.
Gift Tax Rates and Strategies
Federal gift tax rates range from 18% on the first $10,000 of taxable gifts to 40% on amounts over $1 million. In practice, very few people owe gift tax because the lifetime exemption covers nearly $14 million. Smart gifting strategies include: annual exclusion gifts to multiple family members, paying medical bills directly to providers (unlimited, no gift tax), paying tuition directly to educational institutions (unlimited), contributing to 529 plans with five-year election (up to $95,000 in one year per beneficiary), and timing gifts to use the current high exemption before it potentially decreases. Consult a tax professional for gifts above the annual exclusion.