The gift tax is a federal tax imposed on the transfer of property by gift. Any gift made to an individual that exceeds the annual gift tax exclusion amount ($17,000 for 2023 as per IRS Revenue Procedure 2022-38) is subject to the gift tax. The gift tax rates are the same as the estate tax rates, with a top rate of 40%. The gift tax is governed by the Internal Revenue Code [Section 2501](https://www.law.cornell.edu/uscode/text/26/2501). Any gift tax paid during one’s lifetime is subtracted from the estate tax exemption amount.