Gift Tax
A federal tax on transfers of money or property to another person while you are alive, if the gift exceeds the annual exclusion amount ($18,000 per recipient in 2024). The lifetime gift tax exemption is unified with the estate tax exemption.
Legal Definition
A tax imposed under IRC Chapter 12 on the transfer of property by gift during the donor's lifetime, to the extent the value of the gift exceeds the annual exclusion, with a unified lifetime credit shared with the estate tax.
Practical Example
Grandma wants to give $30,000 to each of her 4 grandchildren this year. She can give $18,000 tax-free to each (annual exclusion). The remaining $12,000 per grandchild ($48,000 total) counts against her lifetime exemption but likely triggers no actual tax payment.