The Gift Tax is a federal tax imposed on the transfer of Assets from one individual to another as a gift, without receiving anything of value in return.
As of 2023, a gift tax is only required on gifts exceeding $17,000 a year, which means an individual can give up to $17,000 each year to as many people as they want without having to pay any gift tax or file a gift tax return. Any amount gifted above this annual exclusion amount is subject to the gift tax.
It is important to note that some gifts are exempt from the gift tax, such as gifts to a spouse or donations to qualified charitable organizations.
Additionally, certain educational and medical expenses paid on behalf of someone else may be exempt from gift tax as well.