Who pays the gift tax, the giver or the receiver?

The gift giver (donor) is responsible for paying federal gift tax, not the recipient.

Under the Internal Revenue Code, the gift tax is imposed on the person making the transfer, not the person receiving it. The IRS is explicit on this point: the donor generally owes the tax, and the recipient typically owes nothing and does not report the gift as income. There is one exception, known as a net gift arrangement, where the recipient contractually agrees to pay the tax as a condition of receiving the gift. This doesn't change who the IRS considers the taxpayer; it simply shifts who writes the check, and the arrangement itself has valuation consequences since the agreed-upon tax payment is treated as consideration that can reduce the taxable gift amount.

A few points worth knowing if you're on either side of a gift:

• Annual exclusion: A donor can give up to $19,000 per recipient per year (2025 figures) without triggering gift tax or, in most cases, a filing requirement.
• Lifetime exemption: Gifts beyond the annual exclusion draw down a much larger lifetime exemption (currently just under $14 million), so most donors won't owe out-of-pocket tax even when a return is required.
• Recipient's basis: If you receive a gifted asset, you generally take the donor's original cost basis, which affects any capital gains tax if you sell it later.

Because the donor's tax exposure depends entirely on how the gift is valued (particularly for real estate, business interests, or closely held stock), an accurate, defensible valuation matters more than the tax rate itself. A qualified gift tax appraisal establishes that value on Form 709 and holds up if the IRS questions it. For more on how that valuation process works, see our page on how gifts are valued for tax purposes.