As we move into the final stretch of 2025, many clients are thinking about gifts – both the physical ones under the tree and those from a financial-planning perspective. If you’re considering year-end gifts to family or charities, here are a few smart strategies to keep in mind:
Use Your Annual Gift Exclusion
For 2025, you can gift up to $19,000 per person without dipping into your lifetime exemption. If you’re married, you and your spouse together can gift $38,000 per recipient under exclusion rules. This is a simple way to transfer wealth without tax headaches—great for helping adult children, funding a grandchild’s account, or reducing a future estate.
Fund Education Efficiently
If helping with education is part of your plan, you can still use contributions to a 529 plan or make tuition-payments directly (which are exempt) to reduce taxable estate value. By front-loading (e.g., up to five years of the annual gift exclusion into a 529) you can accelerate the benefit. Time is of the essence if you’re planning before year-end.
Give Appreciated Securities Instead of Cash
If you’re planning a charitable gift, consider donating appreciated stocks or mutual funds instead of cash. You avoid the capital gains tax and still get a deduction for the market value—making it a double win: you help the charity and you reduce your tax burden.
Remember Qualified Charitable Distributions (QCDs)
For those age 70½ or older, making a Qualified Charitable Distribution from your IRA directly to a qualified charity can count toward your required minimum distribution (RMD) and exclude that amount from taxable income. Even though the RMD rules continue to evolve, for 2025 it remains a very useful tool in charitable planning.
Support Family Responsibly
Not all gifts need to be checks. Paying medical bills or educational tuition directly to the provider on behalf of someone doesn’t count against your annual exclusion. It’s a savvy way to provide help without tapping into your regular gifting limits.
