Gift Tax in the United States (2025)
Many people are surprised to discover that the United States imposes a gift tax. Common questions include:
Can I receive a gift from a family member who is not a U.S. citizen and lives abroad without being subject to U.S. gift tax?
Is it different if the gift is from a U.S. citizen who resides abroad?
Does it matter if funds are transferred from a foreign bank account to a U.S. account versus a foreign account?
Is a contribution to a college savings plan for my child considered a gift?
This overview clarifies how the U.S. gift tax works, who is subject to it, and when it applies, based on 2025 IRS rules.
Who Pays the Tax?
The donor (the person giving the gift) is generally responsible for paying the gift tax. In some rare cases, the donor and recipient may agree otherwise, but the IRS considers the tax to be the donor’s responsibility.
Annual Exclusion (2025)
The annual gift tax exclusion is $19,000 per recipient per calendar year.
Married couples can elect to “gift-split” and combine their exclusions, giving up to $38,000 per recipient per year without incurring gift tax.
529 College Savings Plan Contributions
Contributions to a 529 college savings plan are treated as gifts.
A special five-year election allows a lump-sum contribution of up to $95,000 per beneficiary ($190,000 for a married couple who gift-split) to be treated as if it were made over five years.
Any additional gifts to the same recipient during that five-year period would be subject to gift tax.
Gifts That Are Not Taxable
Certain transfers are exempt from gift tax:
Gifts between spouses if both are U.S. citizens
Tuition paid directly to an educational institution
Medical expenses paid directly to a healthcare provider
Gifts to a Non-U.S. Citizen Spouse
The annual exclusion for gifts to a non-U.S. citizen spouse is $190,000 in 2025.
Unlike gifts between two U.S. citizen spouses, gifts above this amount reduce the donor’s lifetime gift and estate tax exemption and must be reported.
Worldwide Application
U.S. gift tax applies to all gifts worldwide if the donor is a U.S. citizen or U.S. resident for gift tax purposes.
Example: John, a U.S. citizen living abroad, transfers ownership of an apartment located outside the U.S. to his brother. Even though the property is outside the U.S., the gift is subject to U.S. gift tax because John is a U.S. citizen.
The same rule applies if John is not a citizen but qualifies as a U.S. resident for gift tax purposes (living in the U.S. with intent to remain permanently).
Non-Citizens and Non-Residents
Non-citizens who are not U.S. residents are subject to gift tax only on U.S.-situated tangible property and U.S. real estate.
Examples: real estate in the U.S., artwork, jewelry, or furniture located in the U.S.
Money or intangible property (such as stocks or bank deposits in the U.S.) is not subject to U.S. gift tax for non-resident, non-citizens.
Example: John, a non-U.S. citizen living abroad, gives his daughter a San Francisco apartment. This transfer is subject to gift tax. Money transferred from his U.S. bank account is not subject to gift tax if he is a non-resident non-citizen.
Receiving Gifts from Foreign Persons
U.S. persons do not pay gift tax on gifts received from foreign individuals.
However, gifts exceeding $100,000 from a foreign person in a year must be reported to the IRS on Form 3520.
Reporting does not create a tax liability but is required for IRS monitoring.
Reporting Requirements
FBAR (FinCEN Form 114): Reports foreign accounts with an aggregate value over $10,000 at any point in the year.
Form 8938: Reports specified foreign financial assets above certain thresholds.
Form 3520: Reports receipt of foreign gifts over $100,000.
Important Note
This information is provided for educational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation. Reading this summary does not create an attorney–client relationship. All figures and exemptions are based on 2025 IRS rules and may change in future years.