From Yahoo Finance: 2025-03-22 08:30:00

A woman and her husband celebrate receiving a financial gift from her parents. The IRS allows tax-free gifts up to $18,000 per individual in 2024. Strategic gifting is crucial, especially for the wealthy. The federal gift tax ranges from 18% to 40% for those giving away $12.92 million (2023) or $13.61 million throughout their lifetime.

The gift tax aims to prevent estate tax avoidance by setting high caps for taxable transfers. The annual exclusion allows tax-free gifts up to $18,000 per individual in 2024, increasing to $19,000 in 2025. The lifetime exemption permits giving away up to $13.61 million in 2024 without triggering taxes.

Understanding the gift tax is essential for those considering financial gifts. The IRS taxes gifts between 18% and 40% for those exceeding the exemption limits. Gift-splitting as a married couple allows for doubled exemption rates. Seeking advice from a financial advisor can help navigate gift tax planning effectively.

Read more: How Much Can I Gift My Daughter and Son-in-Law Without Paying Taxes?