Tax-efficient tips for giving financial gifts to loved ones

While working with your wealth advisor to implement a more tax-efficient gift-giving strategy is possible in most circumstances, sometimes a taxable financial gift is unavoidable. Even when smartly structured, gifts might still be subject to a gift tax paid by the donor. But the good news is that there are many exceptions.

• The IRS allows you to gift up to $19,000 per calendar year (in 2026) to any recipient without paying a gift tax. A married couple may give up to $38,000 to any individual. This includes cash or the fair market value of gifts such as real estate, stocks, or art.^{Disclosure 1} Remember that actions like paying for a wedding or providing an interest-free loan may be treated as a gift from a tax perspective.

Gifts that are not counted toward this limit include:

• Tuition payments made directly to an educational institution—K-12, undergraduate, or graduate school. So, you could pay for your grandchild’s tuition bill on their behalf up to any amount, for example, but you could not give them money to pay the tuition themselves. Expenses like housing, food, supplies, and other costs are not allowed for this exemption.
• Medical expenses paid directly to a medical provider or a health insurance company on behalf of another person.
• Gifts to your spouse.

The IRS sets a lifetime gift and estate tax cap. In 2026, the estate and gift tax limit is $15 million—or $30 million for married couples. These amounts are the maximum you can distribute during your lifetime or have in your estate at death without paying estate taxes.

If a gift to one individual exceeds $19,000 in a calendar year, you can apply the excess to the lifetime gift tax exemption. Your estate also can use any remaining exemption to reduce or eliminate estate taxes at death.

Once you have a grasp of the basic parameters of gifting, your next step is to examine various asset transfer methods and select one that best fits your goals and circumstances. While there are several options you can explore with your wealth advisor, a few of the more common methods are:

Calibrating your exact gift-giving strategy in a way that minimizes tax burdens from gifts or enables tax free gifting requires care and precision. But with the help of your wealth advisor and your tax planning specialist, providing for your loved one’s needs and goals can become a less complex process and a more rewarding experience.