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.

In New York, as in all states, the federal gift tax applies to transfers of property where the donor does not receive full value in return. This tax is governed by federal law, not state law, and is administered by the Internal Revenue Service (IRS). The gift tax can apply to money, real estate, or other types of property. If a person gives a gift that exceeds the annual exclusion limit, which is $16,000 per recipient for 2023, they may need to file IRS Form 709, the United States Gift (and Generation-Skipping Transfer) Tax Return. However, there is also a lifetime exemption amount that allows individuals to give away a certain total amount over their lifetime without incurring gift tax. For 2023, the lifetime exemption is $12.92 million. It's important to note that New York State does not impose a state-level gift tax, but it does have a state estate tax that could be affected by lifetime gifts. Therefore, individuals considering making significant gifts should consult with an attorney or tax advisor to understand the potential tax implications.