For 2025, the annual exemption  to a non- spouse is $19K and was not changed for 2026 by  the Big & Beautiful Bill that passed in July 2025. The lifetime exemption is $13.99M for 2025  and $15M for 2026 due to the passing of the Big & Beautiful Bill.

U.S. citizens or green card holders domiciled in the U.S. who gift property may be subject to the U.S. gift tax. 

In addition,  U.S. citizens and  long-term residents who are covered expatriates who gift property during their lifetime or have bequeathed property upon their death, to a U.S. citizen or to a U.S.  resident will cause the recipient of the gift to pay gift tax to the extent that the taxable gift exceeds the annual exemption. 

Therefore, any U.S. citizen or long-term resident who has expatriated under S877 of the IRS Code AND who is classified as a “covered expatriate” under S877A of the IRS Code will cause the recipient to pay this tax. The tax legislation applies whether or not the assets gifted or bequeathed were acquired before or after the expatriation event.

Reference may be made to IRS Form 8854 with regards to expatriation by a U.S. citizen or long-term resident who may be a “covered expatriate”. Note that a long-term resident will include a green card holder who expatriated (gave up the card and have an I-407) or have made a Treaty declaration on their U.S. tax return filing (per IRS Form 8833) that they are resident of another country for taxation purposes after possessing the green card for at least 8 out of the last 15 years. A “covered expatriate” will be one whose net worth at the time of expatriation is at least $2M, or, whose average annual U.S. tax liability is $206K (2025), or, who is not able to certify under penalties of perjury, that they have been tax compliant for each of preceding 5 years. Tax compliance would also include filing all of the required international foreign reporting forms.

There are also similar rules or application where the recipient is a U.S. trust. Recipients of a “covered gift” or of a “covered bequest” who are charities are exempt from paying the gift tax. 

IRS Form 709 is the annual gift tax return and IRS Form  708 is filed for recipients of a covered gift or bequest to report the transaction and pay the tax.

Tax planning is necessary for those who are considering gifting or bequeathing assets who are in any of the foregoing categories.

Contact your professional advisor prior to implementing any of the outlined strategies.