The federal gift tax applies to transfers of money or property to another person during your lifetime. The annual exclusion ($19,000 per recipient in 2026) and the lifetime exemption ($15M) mean most gifts are tax-free — but reporting may still be required.
The federal gift tax applies to transfers of money or property to another person during your lifetime. The annual exclusion ($19,000 per recipient in 2026) and the lifetime exemption ($15M) mean most gifts are tax-free — but reporting may still be required.
Gifting during life can transfer wealth to the next generation efficiently, reduce a taxable estate, and help family members financially when they need it most. But it also sacrifices the step-up in basis and reduces your future Medicaid lookback protection.
Paying tuition or medical bills directly to the institution is unlimited and doesn't count as a gift at all. For grandparents helping with college, paying the school directly is often better than contributing to a 529.
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