The limit on tax-free gifts is $14,000 per person, as of 2015, according to the Internal Revenue Service. Any amount over this is subjected to gift taxes.
Once the limit is exceeded, individuals can be subjected to paying up to 40 percent, as stated by Forbes. In general, the person gifting is obligated to pay the taxes, but in certain situations, the recipient may be required to pay. Tuition or medical expenses paid on behalf of another person are not classified as gifts. The same is true for gifts given to a spouse or to a political organization. Failing to pay gift taxes can result in fines.