When you hand your grandkid a check for graduation or help your daughter with a down payment on her first home, you’re not just being generous – you might also be stepping into gift tax territory. But don’t let that intimidate you. With the right approach, gifting can be one of the most powerful, intentional tools in your financial plan.
As a financial advisor, I’ve seen firsthand how thoughtful gifting can strengthen families and create lasting impact – beyond the money itself. And here’s the good news: the IRS doesn’t tax every gift. In 2025, you can give up to $19,000 per person per year without having to file a gift tax return. If you’re married, you and your spouse can “split” gifts and give $38,000 per person per year. That means you could gift $38,000 to your son, another $38,000 to your daughter, and even more to grandkids, friends, or future in-laws – every year – without dipping into your lifetime exemption.
Let’s say your niece is starting her own boutique and you decide to help with a $25,000 check. That’s $6,000 over the annual exclusion, so technically, you’ll need to file Form 709, the federal gift tax return. But filing doesn’t mean you’ll owe anything – it just reduces the amount of your lifetime gift and estate tax exemption, which sits at $13.99 million in 2025 for individuals and $27.98 million for married couples. In other words, you’re just documenting the gift, not paying taxes on it.
Where it gets even more interesting is when you gift appreciating assets. Rather than giving cash, consider transferring shares of stock, or a stake in real estate. Not only do you remove the value from your estate, but the future growth happens in your loved one’s hands – not yours. That can be a smart move if you’re concerned about estate taxes or simply want to start legacy planning during your lifetime, when you can see the impact of your gifts.
But strategy matters. If you’re giving assets with large unrealized gains, your recipient inherits your cost basis. That means if they sell, they’ll potentially owe capital gains taxes on the appreciation. Sometimes, holding onto appreciated assets until death makes more sense, since heirs typically receive a step-up in basis. Like most financial moves, gifting needs to be viewed in the bigger picture.
There are also some lesser-known but incredibly effective ways to give that don’t even count as gifts for tax purposes. For example, if you pay your grandchild’s tuition directly to their university – or cover a loved one’s medical bills paid straight to the provider – those are called qualified transfers, and they don’t count against your annual limit or lifetime exemption at all. I’ve helped clients use this strategy to support their family’s education goals while keeping their estate plan airtight.
Gifting doesn’t always need to be formal or complex, but it should be intentional. The most meaningful gifts I’ve seen aren’t just financial – they’re planned with purpose. Whether you’re helping a young adult get on their feet, passing along family business shares, or reducing your future estate tax bill, giving can be one of the most fulfilling financial decisions you make.
If you’re thinking about gifting this year, let’s have a conversation. Our team will help you align your generosity with your goals, avoid unintentional tax hiccups, and make sure your gift truly keeps on giving.
