Gift Tax Calculator: Do You Owe Gift Taxes?

If you’re giving away money or property, you may be subject to the federal gift tax depending on how much you give and who receives it. The gift tax is separate from the estate tax, which applies after death. But both are part of a broader system for taxing the transfer of wealth.

Do you have questions about gift taxes or estate planning more broadly? Speak with a financial advisor today.

To use our calculator, enter the value of gifts you’ve made to up to three people during this tax year. Also enter the total value of all taxable gifts you’ve given throughout your lifetime. This number applies to your lifetime gift tax exclusion and can affect your current and future tax liability.

To understand the gift tax, start by learning the annual exclusion ($19,000 in 2025) and lifetime exemption ($13.99 million). These thresholds help you give away money and assets without triggering the tax. Exceeding these limits can lead can trigger tax rates of up to 40%, so it’s worth understanding how the rules work before making large gifts.

How the Gift Tax Works

The gift tax is a federal tax on transfers of money, property or assets without receiving something of comparable value in return. It exists to prevent individuals from sidestepping estate taxes by giving away assets before death. Transfers may include cash, investments, real estate or other assets. The IRS has specific rules for what it defines as a taxable gift.

Importantly, the gift tax is paid by the giver, not the recipient. Since gift and estate taxes are closely linked, both play a role in long-term financial planning and wealth transfer. Understanding how they interact can help you use exclusions effectively.

Gift Tax Limits: Annual and Lifetime Exclusions

The IRS allows you to give up to $19,000 per recipient in 2025 without triggering gift tax or using your lifetime exemption. You can make gifts to as many people as you like under this threshold each year. Anything above the annual exclusion counts against your $13.99 million lifetime exemption (as of 2025).

Gifts within the annual limit don’t require IRS reporting. Larger gifts must be reported on IRS Form 709 and reduce your remaining lifetime exemption. These limits are central to using gift tax rules effectively for estate planning.

How to Calculate the Gift Tax

Calculating the gift tax involves several steps and considerations, including determining the value of the gift, applying the annual exclusion and lifetime exemption amounts, and understanding the progressive gift tax rates. Here’s a general guide on how to calculate the gift tax:

1. Determine the Value of the Gift

The first step is to determine the fair market value of the gift you’re giving. This could be cash, property, investments or any other asset. The fair market value is typically the price that the property would sell for on the open market between a willing buyer and a willing seller.

2. Apply the Annual Exclusion

If the gift exceeds $19,000 per person in 2025, only the amount above that is potentially taxable.
If the gift is within this limit, it is not subject to gift tax and you don’t need to include it in your calculations.

3. Calculate the Taxable Amount

If you’ve already used your lifetime exemption, the excess amount is subject to gift tax. Federal gift tax rates range from 18% to 40%—which are identical to estate tax rates.

4. File a Gift Tax Return (Form 709)

You’ll need to file a gift tax return if you exceed the annual exclusion, use your lifetime exemption or use gift splitting (more on this below). This form shows the gifts you’ve made and how much of your lifetime exemption you’ve used.

This is a general overview. Your situation may be more complex if you have additional exclusions, deductions or state-level gift tax rules. Consider speaking with a financial advisor or tax professional to assess your personal situation.

Using Strategic Gifting to Reduce Your Taxable Estate

By giving up to $19,000 per recipient each year, you can reduce your taxable estate over time without triggering gift tax. For example, if you give $19,000 to each of your three children, you’ve shifted $57,000 out of your estate in a single year.

This strategy becomes especially useful for those with estates approaching the lifetime exemption limit. You can further reduce your estate by paying someone’s medical or educational expenses directly—these are not considered taxable gifts.

Gift Splitting for Married Couples

If you’re married, you can “split” gifts with your spouse and effectively double the annual exclusion. That means you can jointly give up to $38,000 per recipient in 2025 without using any of your lifetime exemption.

Superfunding a 529 Plan

“Superfunding” a 529 plan is a strategy for front-loading five years’ worth of contributions without triggering the federal gift tax. Normally, gifts above the annual exclusion limit—$19,000 per recipient in 2025—count against your lifetime gift and estate tax exemption. But with superfunding, a single donor can contribute up to $95,000 at once (or $190,000 for a married couple) to a beneficiary’s 529 plan by electing to spread the gift evenly over five years for tax purposes.

This approach allows the account to benefit from more time in the market, potentially compounding tax-free for education expenses. However, no additional gifts can be made to that beneficiary during the five-year period without exceeding the exclusion.

This strategy can help parents or grandparents boost education savings and reduce their taxable estate at the same time. A special election must be made on your tax return the year you make the contribution.

What Is the Lifetime Gift Tax Exemption?

Your lifetime exemption—$13.99 million in 2025—represents the total value you can gift above the annual exclusion without paying tax. Any amount above the annual threshold counts against this limit.

For example, if you give someone $50,000 in a single year, $19,000 is covered by the annual exclusion, and the remaining $31,000 reduces your lifetime exemption. You still won’t owe gift tax unless you’ve already used up your exemption.

Bottom Line

The gift tax is important to understand if you plan on gifting assets to beneficiaries as part of a larger estate plan. You can utilize annual and lifetime exemptions to help you transfer wealth while avoiding the gift tax. Because tax laws are complex and personal finances vary, working with a tax professional can help you align your giving with your long-term financial goals.

Tips for Financial Planning

• When creating a financial plan and making sure you’ve thought through your retirement plan, you may want to speak with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• If you’re thinking through your own tax plan, consider these tax planning strategies to see if any might work for you.

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