What Is the Gift Tax? Definition, Limits, Example

What Is the Gift Tax?

By Adam Levy – Updated Sep 14, 2025 at 11:14 PM

Key Points

File Form 709 for gifts over $19,000 to one individual, under annual gift tax exclusion rules.
Use lifetime gift tax exclusion of $13.99M before gift tax applies, adjusting yearly for inflation.
Split gifts between spouses or use trusts to maximize non-taxable gifts under annual limits.

The gift tax is a tax on the transfer of property to someone else while receiving nothing (or less than full value) in return. The gift tax is typically paid by the giver, not the person receiving the gift. There are several factors that can affect the amount someone has to pay on their gifts.

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Tax documents on a desk with a pen, calculator, and note that says Tax Time. — Image source: Getty Images.

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Source: IRS
Taxable amount	Tax Rate
$0 to $10,000	18%
$10,001 to $20,000	20%
$20,001 to $40,000	22%
$40,001 to $60,000	24%
$60,001 to $80,000	26%
$80,001 to $100,000	28%
$100,001 to $150,000	30%
$150,001 to $250,000	32%
$250,001 to $500,000	34%
$500,001 to $750,000	37%
$750,001 to $1,000,000	39%
$1,000,001+	40%

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Beneficiary

A person or legal entity that receives benefits or advantages from something, most commonly a trust, will, or life insurance policy.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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