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A gift tax is a transfer tax imposed on the value of certain gifts.

In the United States the gift tax is imposed on the gratuitous transfer of monetary and non-monetary property, and is generally paid by the donor. In the United States, the gift tax is governed by Chapter 12, Subtitle B of the Internal Revenue Code. The tax is imposed by section 2501 of the Code.^[1]

The treatment of a gift for purposes of the U.S. gift tax (the transfer tax) should not be confused with the treatment of gifts for other tax purposes. For example, for U.S. income tax purposes most gifts are excluded (under Internal Revenue Code section 102^[2]) from the gross income of the recipient, and thus are not taxed as income.

Generally, if an interest in property is transferred during the donor's lifetime inter vivos then the gift or transfer would not be subject to the estate tax. In 1976, Congress unified the gift and estate taxes so that donors close to death could not circumvent the estate tax by gifting shortly before death. Even so, the tax on gifts made before death is tax exclusive whereas testamentary gifting is tax inclusive thereby making inter vivos gift less tax burdensome. Exceptions include certain gifts made within the three year window before death and gifts in which the donor retains an interest like gifts of remainder interests that are not either qualified remainder trusts or charitable remainder trusts. The remainder interest gift tax rules apply the gift tax on the entire value of the trust by assigning a zero value to the interest retained by the donor.

• IRS publication 950, Introduction to Estate and Gift Taxes, revised September 2004

• Inheritance tax

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