Gift tax is a federal tax applied to the transfer of money or property from one person to another without receiving something of equal value in return. This tax is designed to prevent individuals from avoiding estate tax by giving away their assets before they pass away. In the United States, there is an annual exclusion limit, which allows individuals to give a certain amount each year without incurring gift tax. For 2023, this limit is $17,000 per recipient. Gifts above this amount may require the giver to file a gift tax return and potentially pay taxes on the excess amount.