The U.S. federal tax on transfers of money or property during a donor’s lifetime is called the gift tax.
The tax applies to certain transfers made without receiving equal value in return. It is imposed on the donor rather than the recipient, although the recipient may have reporting responsibilities in particular situations. Gifts can include cash, securities, real estate, or valuable personal property.
The federal gift tax is closely connected with the U.S. estate tax. Both use a unified system of exclusions and exemptions, so lifetime taxable gifts can affect the amount of estate-tax exemption available later. Annual exclusion rules also allow qualifying gifts up to a specified amount per recipient without using the lifetime exemption; the amount is adjusted over time.
A common mix-up is confusing gift tax with inheritance tax. Gift tax concerns transfers made while the giver is alive, whereas inheritance tax is generally charged to a person receiving property after the owner’s death. The United States has a federal estate tax, but no federal inheritance tax.