The Short Answer: Usually No, But It Depends on the Source

You do not owe federal income tax on most gifts you receive, whether they are cash, property, or items. The person who gives you the gift may owe a tax on it — called the gift tax — but that is their responsibility, not yours. The gift tax only applies to the person giving the gift, and only when the gift is very large.

The main exception is gifts from your employer. If your boss or company gives you money or a valuable item as a bonus or reward, that counts as income and you will owe tax on it. Gifts from family members, friends, and other individuals are almost never taxable to you.

Key Takeaways

  • Gifts from family and friends do not create a tax bill for the person who receives them, no matter the amount.
  • The person giving a very large gift may owe gift tax, but you do not report it on your tax return.
  • Gifts from your employer count as income and are subject to tax.
  • Inherited money and property have different tax rules than gifts given while someone is alive.
  • Some gifts come with tax consequences later — such as property that increases in value — even if the gift itself is not taxed.

When the Gift Giver Owes Tax, Not You

The federal gift tax applies to the person giving the gift, not the person receiving it. In 2024, you can give up to $18,000 per person per year without owing any gift tax. If you give more than that to one person in a single year, you must file a gift tax return with the IRS, even if you do not owe tax yet.

The lifetime limit is much higher — currently $13.61 million per person — so most people never hit it. Spouses can combine their annual limits, and gifts to spouses and to certain charities do not count toward the limit at all. The person receiving the gift never files anything or owes anything, regardless of the size.

If you are worried that a gift you received was very large, you do not need to do anything. The giver's tax situation is separate from yours. You straightforward report the gift on your own tax return only if it came from your employer.

Gifts From Your Employer Are Taxable Income

If your boss, company, or anyone paying you for work gives you a gift, bonus, or cash reward, the IRS treats it as income. You will owe tax on it at your regular income tax rate. This includes holiday bonuses, performance bonuses, gift cards, and cash gifts tied to your job in any way.

Your employer should report this on your W-2 form or on a separate statement, and it will be included in your taxable income for the year. If you receive a gift from your employer that is not cash — such as a watch, a piece of jewelry, or a gift basket — the value of that item is also taxable income to you, though your employer may not withhold tax on it when ready.

The only exception is a small gift from your employer that costs less than $25. Gifts under that threshold do not have to be reported as income. Anything over $25 is taxable.

Inherited Money and Property Have Different Rules

Money and property you inherit from someone who has died are not taxable income to you. You do not report an inheritance on your federal income tax return, and you do not owe tax on it, no matter how much it is.

However, inherited property can create tax consequences later. If you inherit a house, stocks, or other assets, your tax basis — the value used to calculate gain or loss if you sell — is usually the value on the date of death, not what the original owner paid. This is called a step-up in basis, and it often means you will owe less tax if you sell the property later.

Some inherited assets, such as retirement accounts, have special rules. You may be required to take withdrawals and pay income tax on them over time. Talk to a tax professional if you inherit a retirement account or a large amount of property.

Gifts That Increase in Value Later

If someone gives you property — such as stock, real estate, or art — and you later sell it for more than it was worth when you received it, you will owe tax on the gain. The gift itself is not taxed, but the increase in value is.

Your tax basis in the gift is usually what the giver paid for it, not what it was worth when you received it. If your grandmother bought a stock for $100 and gave it to you when it was worth $500, your basis is $100. If you sell it later for $800, you owe tax on the $700 gain ($800 minus your $100 basis).

This rule applies to gifts from anyone except your spouse. Gifts from spouses have special basis rules that are more favorable. Keep records of what the giver paid for any property you receive as a gift, because you will need that information when you sell it.

State and Local Gift Taxes

Most states do not have a gift tax. Only a few states — currently North Carolina, Tennessee, and a handful of others — have ever had one, and most of those have repealed it. Check your state's tax website if you live in a state that historically had a gift tax, but in most places there is no state-level gift tax to worry about.

Local taxes on gifts are extremely rare. Your city or county almost certainly does not tax gifts. If you are unsure, contact your state's department of revenue or tax office.

How to Report Gifts on Your Tax Return

If you received a gift from someone who is not your employer, you do not report it anywhere on your federal tax return. You straightforward do not mention it. The IRS does not require you to list gifts you received.

If you received a gift from your employer, it should appear on your W-2 or on a separate statement from your employer. It will be included in your taxable income automatically. If your employer did not report it and you believe it should have been, contact your employer's payroll or human resources department.

If you sold property you received as a gift and made a profit, report the sale on Schedule D (Capital Gains and Losses) when you file your tax return. You will need the date you received the gift, the value on that date, the date you sold it, and the sale price.

Frequently Asked Questions

Do I have to report a large cash gift to the IRS?

No. You do not report gifts you receive on your tax return, no matter the amount. The person who gave you the gift may have to file a gift tax return if it was over $18,000 in a single year, but that is their responsibility. You do nothing.

What if someone gives me money and says it is a loan, not a gift?

If it is truly a loan, you do not owe income tax on it. However, if the loan is large and has no written agreement, the IRS may treat it as a gift instead. If there is interest involved, the lender may owe tax on the interest income. Get a written agreement that clearly states the terms if the amount is significant.

Do I owe tax on a gift card from my employer?

Yes. A gift card from your employer is taxable income to you, just like cash. Your employer should report its value on your W-2. If they did not, report it as other income on your tax return.

Can I deduct a gift I gave to someone else?

No. Personal gifts are never deductible on your federal tax return. Charitable donations to may have access to organizations are deductible, but gifts to individuals are not. Keep records of any large gifts you give in case the IRS asks, but you cannot deduct them.

What if I received a gift and the giver asks me to split the tax bill?

You do not owe any tax on the gift itself, so there is nothing to split. If the giver owes gift tax because the gift was very large, that is entirely their responsibility. You should not pay any part of it.