The federal gift tax is a tax levied by the federal government on a donor who transfers property to a donee without the donee giving consideration in return. The gifted property must be in an amount above the limit set by the federal government in order to be subject to the tax.
As of 2023, there is a gift exclusion of $17,000. As a result, a party can make a gift up to $17,000 per person without paying a federal gift tax. Currently, the federal gift tax rate varies from 18% to 40% depending on how large the gift is.
[Last updated in January of 2023 by the Wex Definitions Team]