Gift Tax Calculator: Do I Have to Pay Tax When Someone Gives Me Money?

Calculators Tax Tools

7 minute read

Published on: Dec 17, 2024

Published by: TaxAct

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Updated for tax year 2024.

Surprise — Mom and Dad gave you a nice check! Maybe it’s enough for dinner, or maybe it’s something more substantial. Either way … are there any tax implications for receiving such a gift?

At a glance:

The gift giver pays any gift tax owed, not the receiver.
You don’t have to report gifts to the IRS unless the amount exceeds $18,000 in 2024 (increasing to $19,000 in 2025).
Any gifts exceeding $18,000 in a year must be reported and contribute to your lifetime exclusion amount.
You can gift up to $13.61 million over your lifetime without paying a gift tax on it (as of 2024).
The IRS adjusts the annual exclusion and lifetime exclusion amounts every so often.

How much is the annual gift tax for 2024?

First, let us put your mind at ease. The total gift amount must be quite substantial before the IRS even takes notice. For tax year 2024, if the value of the gift is $18,000 or less in a calendar year, it doesn’t even count. The IRS calls this amount the annual gift tax exclusion.

There is also a lifetime exclusion of $13.61 million (as of 2024). Any amount you gift over the annual exclusion gets subtracted from your lifetime exclusion. You only owe gift taxes once you exceed your lifetime exclusion.

The exclusions are per person, meaning they are doubled for married couples. For example, if a married couple makes a gift from joint property, they can each gift up to the annual exclusion. This means Mom and Dad could give you $36,000 in 2024 without worrying about filing a gift tax return. This is called “gift splitting.” Married couples can also gift double the lifetime exclusion — $27.22 million in 2024.

What is the gift tax rate?

The gift tax exists to prevent people from giving away their money to avoid paying their income taxes. The gift tax rate fluctuates from 18% to 40%, depending on the size of the gift:

Taxable gift amount	Gift tax rate
up to $10,000	18%
$10,001 to $20,000	20%
$20,001 to $40,000	22%
$40,001 to $60,000	24%
$60,001 to $80,000	26%
$80,001 to $100,000	28%
$100,001 to $150,000	30%
$150,001 to $250,000	32%
$250,001 to $500,000	34%
$500,001 to $750,000	37%
$750,001 to $1,000,000	39%
$1,000,000 and over	40%

For instance, if you give someone a gift worth between $20,000 and $40,000, the marginal gift tax rate is 22%. But if you give someone a gift valued between $750,001 and $1,000,000, the marginal gift tax rate would be 39%.

Do I have to pay taxes on a gift?

As the recipient of the gift, you generally do not have to pay the gift tax. The person who does the gifting will file the gift tax return, if necessary, and pay any gift tax due.

If the donor does not pay the gift tax, the IRS may try to collect it from you. But don’t let this worry you — most donors who can afford to make gifts large enough to be subject to gift taxes can also afford to pay the gift taxes!

Do I have to report gifted money as income?

No, you do not have to report money you receive as a gift as income. While any gift may be taxable, the recipient of the gift does not have to pay the gift tax. And the person who gives you the gift only needs to file a gift tax return if it’s more than the $18,000 annual exclusion.

How much can you gift without paying income taxes?

In 2024, you can gift up to $18,000 per person without the gift contributing to your lifetime exclusion of $13.61 million. These amounts will increase in 2025 to a $19,000 annual exclusion and a $13.99 million lifetime exclusion.

Each year, the IRS uses gift tax returns to keep track of any gifts that exceed the annual gift exclusion amount. Your excess gift amount accumulates until it reaches the lifetime gift tax exclusion. That’s when you start paying the gift tax.

This lifetime gift tax exemption allows the gift giver to give more than the annual gift tax exclusion. So, in 2024, gift givers will need to file a gift tax return for any gifts exceeding the $18,000 annual gift tax exclusion, but they will not need to pay gift tax unless they have given away over $13.61 million in their lifetime as of this year.

Do I need to report a gift on my taxes?

If you receive a gift, you do not need to report it on your taxes. According to the IRS, a gift occurs when you give property (like money) without expecting anything in return.

If you gift someone more than the annual gift tax exclusion amount ($18,000 in 2024), the giver must file Form 709 (a gift tax return). However, that still doesn’t mean they owe gift tax.

Do I have to pay taxes on a $20,000 gift?

You do not need to file a gift tax return or pay gift taxes if your gift is under the annual gift tax exclusion amount per person ($18,000 in 2024). But even if you do exceed that amount, you don’t necessarily need to pay the gift tax.

This is where the lifetime gift tax exclusion comes in — each gift you give contributes to your lifetime exclusion amount, but unless your gifts exceed the lifetime limit, you do not need to pay gift taxes, even when you are required to file a gift tax return.

For example, say someone gives you $20,000 in 2024. The giver must file a gift tax return showing an excess gift of $2,000 ($20,000 gift – $18,000 exclusion = $2,000). The gifter’s total gift amount will also count toward their lifetime gift tax exemption.

Gifts subject to the gift tax

When giving someone large sums of money, it helps to know what events might trigger a gift tax return:

Gifting large sums of money to a child or grandchild to help them pay for a house, wedding, car, etc.
Interest-free loans to family members.

Gifts not subject to the gift tax

Some transfers of money are never considered taxable gifts. These transfers are tax-free, regardless of the amount.

For gift tax purposes, it’s not a gift if:

It’s given to a spouse who is a U.S. citizen (special rules apply to spouses who are not U.S. citizens).
It’s paid directly to an educational or medical institution for someone’s medical expenses or tuition expenses.

What about estate taxes and inheritance taxes?

Many people also have questions about estate and inheritance taxes when discussing the gift tax. While often grouped together, these are actually two different types of gift taxes:

Inheritance tax: This is the tax a beneficiary must pay when inheriting assets from someone who died. There is no federal inheritance tax, but as of tax year 2024, six states impose their own inheritance tax — Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. The tax rates vary depending on the inheritance’s size and the beneficiary’s relationship to the person who died. Spouses (and sometimes children or other descendants) are generally exempt from the inheritance tax.
Estate tax: This is the tax taken out of an estate (cash, real estate, stocks, etc.) upon someone’s death. The federal estate tax only comes into play when the total estate value exceeds $13.61 million (the same as the lifetime gift tax exclusion). Any portion of the assets exceeding this amount is a taxable estate. Some states have their own estate tax as well, and the exclusion amount varies depending on the state.