Gift Tax Calculator: Tax on a Reportable Gift
Work out the federal gift tax owed on a reportable gift above the lifetime exemption — the figure that almost never bites in practice but can be substantial when it does.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Gift tax | Net gift after tax |
|---|---|---|
| 40% of $2M | 800,000 | 1,200,000 |
| 40% of $10M | 4,000,000 | 6,000,000 |
| 32% of $1.5M (lower bracket) | 480,000 | 1,020,000 |
| 40% of $500k | 200,000 | 300,000 |
How This Calculator Works
Enter the taxable gift amount (above the annual exclusion and exhausting the lifetime exemption) and the applicable rate. The calculator multiplies the two to give the gift tax and shows the net amount after tax.
The Formula
Percentage of an Amount
Amount is the base value, Percentage is the rate applied to it
Worked Example
A $2,000,000 taxable gift at the 40% top federal rate owes $800,000 in gift tax. In practice this is rare — most US donors use the lifetime exemption (over $13M per individual in 2024) before any cash gift tax is due. Real-world payment usually comes only on very large estates or aggressive lifetime gifting strategies.
Key Insight
Federal gift tax is largely a planning structure rather than a tax most people pay. The annual exclusion ($19,000 per recipient in 2025) lets many gifts pass tax-free outright; gifts above it draw down the lifetime exemption ($15M per individual for 2026). Only after the lifetime exemption is exhausted does cash gift tax actually become due.
Annual exclusion strategy
A U.S. donor can give $19,000 (2025) to ANY recipient annually with no gift tax consequences and no reduction of the lifetime exemption. There is no limit on the number of recipients — $19K to each of 10 grandchildren = $190K of gifts in a year, all gift-tax-free. Married couples splitting gifts: $38K per recipient.
Strategy for substantial-wealth families: annual-exclusion gifting to many recipients (children + grandchildren + spouses of children) steadily reduces a taxable estate. A family of 4 children + 4 in-laws + 10 grandchildren = 18 recipients × $38K (couple splitting) = $684K transferred each year without touching the lifetime exemption.
Over 20 years that is roughly $13.68M moved out of the estate — a large share of most estates, transferred during life via annual gifts rather than at death.
Implementation: direct gifts of cash or securities; 529 plan superfunding (5 years of annual exclusion in a single year: $95K single, $190K couple); UTMA/UGMA contributions count against the annual exclusion. Trust contributions may or may not qualify (they need 'Crummey withdrawal rights' to count for the annual exclusion).
Special exclusions — tuition and medical
Beyond annual exclusion, additional unlimited exclusions for. (1) DIRECT TUITION PAYMENT — must be paid directly to qualifying educational institution. Doesn't count against annual exclusion. No limit. Includes K-12, college, graduate school, vocational. Tuition only (not room, board, books).
(2) DIRECT MEDICAL PAYMENT — paid directly to healthcare provider or insurance company. No limit. Includes doctor, dentist, hospital, prescription medications, long-term care, health insurance premiums.
Strategy. Grandparents paying grandchild's college tuition directly to university: unlimited; doesn't count against annual exclusion or lifetime exemption. Combined with annual exclusion gifts: substantial wealth transfer capacity.
Critical: payment MUST be direct to institution/provider, not reimbursement to recipient. Giving cash to grandchild who pays tuition = counts against annual exclusion. Giving check directly to university = unlimited exclusion. Mechanics matter.
U.S. gift tax thresholds (2024 and 2025)
Reference U.S. gift tax exclusions and exemptions.
| Exclusion/Exemption | 2024 | 2025 |
|---|---|---|
| Annual exclusion per recipient | $18,000 | $19,000 |
| Annual exclusion (married couple gift-splitting) | $36,000 | $38,000 |
| Lifetime exemption (unified with estate) | $13.61M | $13.99M |
| Lifetime exemption — MFJ combined | $27.22M | $27.98M |
| Annual exclusion for non-citizen spouse | $185,000 | $190,000 |
| Tuition (direct payment) | Unlimited | Unlimited |
| Medical expenses (direct payment) | Unlimited | Unlimited |
Under the 2025 One Big Beautiful Bill Act (OBBB), the lifetime estate/gift exemption did NOT sunset — it was made permanent and set at $15M per individual for 2026 (indexed thereafter), up from $13.99M in 2025. The earlier 2024-2025 'use it before it halves' window no longer applies, though annual-exclusion gifting still steadily reduces a taxable estate over time.
Frequently Asked Questions
Who pays the gift tax?
The donor, not the recipient. The recipient receives the gift free of federal income tax; the donor owes the gift tax if any is due.
What is the annual exclusion?
Around $19,000 per recipient in 2025, indexed for inflation. Gifts at or below this level per recipient per year are not reportable and do not affect the lifetime exemption.
What is the lifetime exemption?
Over $13M per individual in 2024 (subject to scheduled changes after 2025). Cumulative gifts above the annual exclusion draw down this exemption — only gifts beyond the lifetime exemption owe actual cash gift tax.
Are gifts between spouses taxable?
Gifts to a US citizen spouse are unlimited and tax-free under the marital deduction. Gifts to a non-citizen spouse have a higher annual exclusion but are not unlimited.
What about state gift tax?
Most states do not have a separate gift tax. Connecticut historically had one; check your specific state's current rules.
When is this calculator unreliable?
When ignoring annual exclusion (substantial gifting can be done without gift tax via $19K/year/recipient). Also unreliable for direct tuition and medical payments (unlimited exclusion if paid directly to institution/provider). For complex estate planning, work with qualified estate planning attorney — gift tax strategies involve substantial nuances.
References & Authoritative Sources
- Internal Revenue Service (IRS) — Gift Tax · consulted July 4, 2026 · Federal regulator on gift tax
- American College of Trust and Estate Counsel (ACTEC) — Gift Planning Resources · consulted July 4, 2026 · Professional gift and estate planning resources
- Tax Policy Center — Gift Tax Analysis · consulted July 4, 2026 · Academic gift tax research
Related Calculators
Data Sources & Benchmarks
This calculator draws on 1 independent, dated source.
Methodology & Review
U.S. federal gift tax equals (gifts above the annual exclusion − lifetime exemption used) × 40%. Annual gift exclusion 2025: $19,000 per donor per recipient. Lifetime exemption (unified with the estate tax) is $15M per individual for 2026 under the OBBB — up from $13.99M in 2025. Gifts above the annual exclusion count against the lifetime exemption, with no immediate tax until it is exhausted. The calculator returns a federal gift tax estimate. RELIABILITY: Reliable for direct calculation. Less reliable for actual planning because (a) the marital deduction allows unlimited gifts between U.S. citizen spouses; (b) certain payments are excluded entirely (tuition paid directly to an educational institution; medical expenses paid directly to a provider); (c) split gifts between spouses double the annual exclusion to $38,000 per recipient.
Updated