You usually don't pay income tax on gifts you receive, but the person who gives you money or property may have to file a form with the IRS
The short answer: you don't owe federal income tax on a gift. The IRS does not tax the person receiving the gift. However, the person giving you the gift may have to report it to the IRS if it exceeds a certain amount in a single year, even though they usually won't owe tax on it either.
The confusion happens because the IRS tracks large gifts through a form called the Gift Tax Return (Form 709). This form exists to monitor whether someone is giving away so much money over their lifetime that they might owe estate tax later. For most people, this is purely a reporting requirement—not a tax bill.
State taxes vary. Most states don't tax gifts at all, but a few have their own rules. If you live in a state with an income tax, your state almost certainly does not tax gifts either, but you should check your state's tax authority website if you're uncertain.
Key Takeaways
- You do not pay federal income tax on money or property you receive as a gift, regardless of the amount.
- The giver may have to file Form 709 with the IRS if a single gift exceeds $18,000 per person per year (the 2024 limit, which changes annually).
- Filing Form 709 is usually just reporting—the giver typically owes no tax unless they have given away more than $13.61 million in their lifetime (the 2024 federal lifetime exemption).
- Gifts from your employer, prizes, and gambling winnings are taxed differently and may require you to report income.
- State gift taxes are rare; most states do not tax gifts at all.
When the giver has to report a gift to the IRS
The IRS sets an annual threshold called the annual exclusion. In 2024, one person can give up to $18,000 per year to another person without filing Form 709. This limit is per giver, per recipient—so your parent could give you $18,000 and your spouse could give you another $18,000 in the same year without either filing.
If a single gift exceeds $18,000, the giver must file Form 709 in the year they made the gift. This applies even if they owe no tax. The form tells the IRS about the gift and counts it against their lifetime exemption. The annual exclusion amount changes most years, so if you receive a large gift in a future year, check the IRS website for the current limit.
Married couples can combine their exclusions. If both spouses agree, they can each give $18,000 to the same person in 2024, totaling $36,000, without either filing Form 709.
The lifetime exemption and when the giver actually owes tax
The federal government allows each person to give away a total of $13.61 million during their lifetime (in 2024) before owing any gift or estate tax. This is called the lifetime exemption. When someone files Form 709 for a gift over the annual limit, that excess counts against their lifetime exemption—but they still owe no tax unless they exceed $13.61 million total.
For example, if your parent gives you $50,000 in 2024, they file Form 709 reporting the $32,000 that exceeds the annual exclusion. That $32,000 counts against their lifetime exemption, but they owe no tax because they are still well below $13.61 million. The form is purely a record.
The lifetime exemption is very high and applies to very few people. Unless the giver is wealthy and has already given away millions, they will almost certainly never owe tax on gifts, even if they file Form 709 multiple times.
Gifts that are taxed differently
Some things that look like gifts are actually taxable income to you. Gifts from your employer are taxed as wages. If your boss gives you a $500 bonus or a gift card worth more than a small amount, you report it as income on your tax return. The same applies to prizes and awards—if you win a contest or raffle, that is taxable income to you, not a gift.
Gambling winnings are also taxable income, even though they may feel like a gift from luck. If you win money at a casino, lottery, or poker game, you must report it. The person or organization paying you may issue a Form W-2G or 1099-MISC, depending on the amount and type of winnings.
Inheritances are generally not taxed to the person who receives them, though the estate itself may owe tax before distribution. If you inherit money or property, you do not report it as income on your personal tax return.
Gifts of property and investments
The same rules explore to gifts of property, stocks, real estate, or other assets. You do not pay income tax on receiving the gift. However, if you later sell the property, you may owe capital gains tax on the increase in value since the giver received it.
When you receive a gift of stock or property, you inherit the giver's original cost basis. If your parent bought stock for $5,000 and it is worth $15,000 when they give it to you, and you later sell it for $20,000, you owe capital gains tax only on the $5,000 gain from $15,000 to $20,000. The $10,000 gain that happened before you received it is not taxed to you.
The giver may have to file Form 709 if the property's fair market value at the time of the gift exceeds the annual exclusion. Again, this is usually just reporting, not a tax bill.
State and local gift taxes
Most states do not have a gift tax. The federal government taxes gifts, but states generally do not. However, a handful of states have their own estate taxes or inheritance taxes, which work differently and explore after someone dies, not when they receive a gift during life.
If you live in a state with an income tax, that state almost certainly does not tax gifts either. You can check your state's department of revenue website if you want to confirm, but gift taxes are extremely rare at the state level in the United States.
What to do if you receive a large gift
If you receive a gift over $18,000 in a single year, you do not need to do anything on your own tax return. You do not report it as income. The responsibility to file Form 709 falls on the giver, not you.
However, it is reasonable to ask the giver whether they plan to file the form, especially if the gift is very large. If they are unsure, they should speak with a tax professional or check the IRS website for Form 709 instructions. You can also mention to them that the form is usually just reporting and does not result in a tax bill for most people.
Keep records of the gift—a bank transfer receipt, a written note, or a canceled check—in case questions arise later. This is especially important for large gifts, which the IRS may scrutinize to confirm they are genuine gifts and not loans or other transactions.
Frequently Asked Questions
Do I have to report a gift on my tax return?
No. You do not report gifts as income on your federal tax return, regardless of the amount. The giver may have to file Form 709 if the gift exceeds the annual exclusion, but that is their responsibility, not yours.
What if someone gives me money and says it is a loan, not a gift?
If it is a genuine loan, you do not owe income tax on it. However, if the loan is large and has no written agreement or repayment terms, the IRS may question whether it is really a loan or a disguised gift. If you intend to repay it, put the terms in writing and make actual payments. Interest may also be required on large loans, depending on the amount and the relationship between you and the lender.
Do I owe tax if my parent gives me money to pay for college?
No. Money your parent gives you for college is a gift and is not taxable to you. However, if you receive a scholarship or grant, that may have tax implications depending on how you use it. Scholarships used for tuition and required fees are generally not taxed, but scholarships used for room, board, or books may be. Consult a tax professional if you have questions about scholarship taxation.
What if I receive a gift from someone outside the United States?
Gifts from non-U.S. citizens who do not live in the United States are generally not subject to U.S. gift tax. However, gifts from U.S. citizens or residents are subject to the same rules regardless of where the giver lives. If you are unsure about a specific situation, a tax professional can advise you.
Can I gift money to someone else without filing a form?
Yes, as long as you stay within the annual exclusion. In 2024, you can give up to $18,000 per person per year without filing Form 709. If you give more than that to one person in a single year, you must file the form, though you typically owe no tax.