2025 Gift Tax Limits at a Glance 

For 2025, the annual gift tax exclusion is set at $19,000 per recipient. Married couples who choose to split gifts may combine for an annual exclusion of $38,000 per recipient. Gifts above the annual exclusion may require the filing of IRS Form 709, although owing gift tax is uncommon unless total lifetime gifts exceed the federal exemption threshold. For 2025, the lifetime federal combined estate and gift tax exemption is $13.99 million per person. 

Changes Introduced by the One Big Beautiful Bill 

The One Big Beautiful Bill (OBBB) that went into effect in mid-2025 includes provisions that impact wealth transfer planning. One of the key changes is that beginning in 2026, the federal lifetime estate and gift tax exemption is set to increase to $15 million per person and continue to be adjusted for inflation. This adjustment alleviates some uncertainty regarding a potential drop in the exemption and may influence the timing and structure of transfers. 

Trends in Education and Retirement Funding Among High Net-Worth Families 

Recent discussions among wealth advisors highlight two emerging trends that may be relevant for families thinking about year-end gifting: 

• Some households are taking advantage of 529 plan super-funding (electing to treat a large contribution as if made over five years) and combining that with rollover options for unused amounts under the SECURE 2.0 Act, which allows certain 529 assets to be transferred into a Roth IRA for the beneficiary. This pathway is subject to annual Roth contribution limits and earned-income requirements. 

• Retirees age 70½ or older are increasingly reviewing the use of Qualified Charitable Distributions (QCDs) from IRAs. In 2025, the cap remains indexed (about $108,000 per person) and the ability to direct a QCD to a split-interest vehicle (up to roughly $54,000) continues. These distributions can count toward required minimum distributions and may reduce adjusted gross income, though eligibility rules and timing are important. 

Year-End Considerations for Gift-Planning 

As December 31 approaches, several factors often enter the conversation: 

• Direct payments made for tuition or medical expenses on behalf of another person remain excluded from the gift tax rules, potentially offering added flexibility. 

• Spousal gift-splitting remains an option in appropriate situations, effectively doubling the exclusion amount for the married couple. 

• For families with privately held business interests or complex ownership structures, the interaction of valuation, partial-interest transfers and lifetime exemptions may merit review. 

• Filing requirements for non-cash gifts, appraisals, and documentation should be kept in mind to ensure compliance. 

The interface between annual gift limits, lifetime exemptions, and recent legislative changes means that the landscape of gifting-and-wealth-transfer planning may look somewhat different now than a year ago. While the mechanics remain complex and highly individualized, staying informed about the current numbers and structural possibilities can help in exploring what year-end gifting might mean in your situation. Since individual circumstances vary, consultation with the professionals on YHB’s Private Client Service Team may be useful when considering specific plans. If you’d like to explore how year-end gifting strategies could fit into your broader financial plan, contact us today.