The federal gift tax is a tax on the transfer of property from one individual (the donor) to another (the donee) when the donor receives nothing—or less than full value—in return. The tax applies whether the donor intends the transfer to be a gift or not.

The gift tax applies to the transfer of a gift of any type of property. You make a gift if you give property (including money) or the use of or income from property without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

For additional information, see Internal Revenue Service (IRS) Form 709 and its instructions.

The federal gift tax is applicable to all states, including Hawaii (HI), and is governed by federal law, not state statutes. It is imposed on the transfer of property by one person (the donor) to another (the donee) without receiving full value in return. The intent behind the transfer is irrelevant for tax purposes; if the donor does not receive something of at least equal value, it is considered a gift. This tax applies to all forms of property, including money, real estate, and other tangible and intangible items. When a person sells something for less than its market value or extends a loan without interest or at a reduced interest rate, it may also be considered a gift. Each individual has an annual gift tax exclusion amount, which allows them to give gifts up to a certain value per recipient per year without incurring the gift tax. Beyond this exclusion, the donor must file IRS Form 709 to report the gift. The instructions for Form 709 provide further details on how to calculate and report the tax. It is important to consult with an attorney or tax advisor for personalized advice, as the federal gift tax can be complex and may involve various exclusions, deductions, and lifetime exemptions.