Many clients want to help their children, grandchildren, or other loved ones financially — especially as we approach the holiday season. But before writing that check, it’s important to understand the IRS rules around gifting.
The Annual Gift Tax Exclusion
For 2025, you can give up to $19,000 per recipient without having to file a gift tax return. Married couples can give up to $38,000 per person if both spouses elect to gift-split.
These gifts are completely tax-free to both the giver and the recipient, and they don’t count against your lifetime estate tax exemption.
Lifetime Exemption Still Applies
Even if you exceed the $19,000 annual limit, you may not owe taxes — but you must file a gift tax return (Form 709), and the excess amount will count against your lifetime exemption, which is $13.99 million in 2025.
Smart Giving Strategies
- Gift to pay for medical or educational expenses: These are not subject to gift tax if paid directly to the institution.
- Use 529 plans: You can front-load up to 5 years’ worth of gifts into a 529 education savings plan without exceeding limits.
- Give appreciated assets: Gifting stock or property may shift future appreciation out of your estate (but be aware of cost basis implications).
Why It Matters
The current lifetime exemption is scheduled to drop significantly after 2025 unless Congress extends it. That means 2025 may be the last year to take advantage of the higher limits — making this a prime time to review your gifting strategy.
If you're considering making year-end gifts, or want to discuss a long-term estate strategy, now is the time to start the conversation.