Gift Tax History

About Gift Tax History

The US gift tax was enacted in 1924 to prevent taxpayers from avoiding the estate tax by giving away their wealth before death. The gift tax is separate from but linked to the estate tax. The annual gift tax exclusion allows gifts of up to 18,000 per recipient in 2024 without filing a return. Gifts above the annual exclusion count against the lifetime estate and gift tax exemption of 13.61 million. Married couples can combine these amounts. The gift tax is paid by the giver, not the recipient. The gift tax is widely misunderstood. Many people believe any gift over the annual exclusion is taxed immediately, but it merely counts against the lifetime exemption. The gift tax prevents the erosion of the estate tax base and ensures wealthy families cannot simply transfer all assets before death.