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 imposed by the federal government, not the state, and it applies to gifts of money, property, or the use of property. The donor is typically responsible for paying the gift tax. However, there are annual exclusions and a lifetime exemption amount that may apply, reducing or eliminating the gift tax owed. For 2023, the annual exclusion is $17,000 per recipient, and the lifetime exemption amount is $12.92 million. Gifts that exceed the annual exclusion amount must be reported to the IRS using Form 709. It's important to note that New York State does not have a separate state gift tax, but it does have a state estate tax which could be affected by the federal gift tax rules, as gifts made within three years of death may be added back into the estate for tax purposes. For specific advice and how these rules apply to individual circumstances, it is recommended to consult with an attorney or a tax advisor.