The holidays will be here before we know it, and as the season approaches, you may be thinking about gifting funds to grandchildren, helping with a child's home down payment, or contributing to a 529 plan. When gifts get larger, it's worth knowing where the lines are, so a generous impulse doesn't turn into a filing headache next spring. So, let’s take a look at this holiday gift tax refresher.
For 2026, you can give up to $19,000 to any one person, any number of people, without touching your lifetime exemption or filing anything with the IRS. Married couples can combine exclusions and give $38,000 to a single recipient by electing to split the gift.This resets every January 1. If you're close to the end of the year and thinking about a gift, timing it before or after the new year can effectively double what you can give within a twelve-month window.Going over the exclusion isn't usually a tax event. Give more than $19,000 to one person in a year, and you'll need to file a gift tax return (Form 709). That doesn't mean you owe gift tax. It means the excess comes out of your lifetime exemption, which currently sits at $15 million per person ($30 million for a married couple) thanks to last year's tax legislation making that higher exemption permanent rather than letting it revert to roughly half that amount.For most individuals, that lifetime number is high enough that a large gift is a paperwork requirement, not a tax bill. You can learn more about the annual exclusion by reading the details from the IRS here.
Tuition and medical expenses paid directly to the school or provider, not to the individual, are excluded entirely. No dollar limit, no impact on the annual exclusion or lifetime exemption. If you're covering a grandchild's tuition, paying the university directly rather than gifting the money to your child or grandchild keeps it fully outside the gift tax system.
Contributing to a 529 plan is a gift. Still, it comes with a useful option: you can front-load five years of annual exclusions into a single contribution, up to $95,000 per beneficiary in 2026 ($190,000 for a married couple splitting gifts), without using any lifetime exemption. It's one of the more efficient ways to move a meaningful amount toward a grandchild's education in one year. Talk to your wealth advisor or read more on 529 contributions here.
Down payment gifts follow the same rules as any other gift. If the amount stays within the annual exclusion, you don't need to report it. Go above it, and the excess draws down your lifetime exemption, just like a large check for any other purpose. The one wrinkle is your lender, not the IRS: most mortgage lenders require a signed gift letter confirming the money is a gift and not a loan, since undisclosed debt can affect a buyer's approval. If two parents are each contributing, or a couple is splitting the gift, that can effectively double what's covered under the exclusion before anything needs to be filed. Check out this detailed article from US News & World Report on down payment gifts to read more on this topic.
Most holiday-season generosity never comes close to these thresholds. But if you're considering something larger before year-end, a quick conversation with your XML Wealth Advisor first can help you decide whether to make the gift now, split it across December and January, or route it as a direct tuition or medical payment instead. Small adjustments in how a gift is structured can save a filing requirement or, in some cases, provide a meaningful exemption down the road.If you have questions about how this applies to your financial plan, reach out. We're happy to walk through it before you write that holiday check.
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