10 Ways to Put Annual Exclusion Gifts to Good Use
The annual gift tax exclusion allows individuals to give a certain dollar amount each year to someone else without triggering gift tax consequences. The annual gift tax exclusion for 2026 is $19,000 per person, meaning you could give up to that amount to as many people as you like, whether they are related to you or not. Married couples can double that figure, allowing them to transfer $38,000 to any number of recipients. In some cases, individuals may give amounts above the annual exclusion without paying a gift tax due to the lifetime estate and gift tax exemption, but doing so generally requires additional tax reporting and may reduce the amount available for future transfers.
People often use annual exclusions to help a family member get a financial head start, like contributing to a 529 college savings plan, funding a Roth IRA, paying down debt, or contributing to a wedding, first home purchase, or new business.
Below are some additional ideas if you are considering annual exclusion gifts to share your wealth with loved ones and other recipients during your lifetime. These are general examples for illustrative purposes and may not be appropriate for every situation.
1. Create Memorable Experiences
Rather than a physical object or money, use the exclusion gift for an experience, like a vacation, concert, specialty lessons, or family gathering.
2. Assist with Home Improvements
Assist with a renovation or repair project to make a home safer, more efficient, or more enjoyable. Also consider enhancements to costly home furnishings, like kitchen appliances or a new bed. Planting a tree or other landscape features could be a way to add value and preserve a nice memory.
3. Encourage Relaxation and Wellness
If you pay someone’s medical expenses directly to the healthcare provider, you do not need to count those against your annual exclusion. But there could be health-related expenses that aren’t medically necessary that are still worthwhile, like fitness classes, spa visits, aromatherapy, or meditation.
4. Foster Creativity
Help an artist or craftsperson acquire the supplies and tools needed to develop their trade (or enjoy a hobby) or pay for an instructional workshop.
5. Give Professional Advice
Pay for the services of a consultant, attorney, accountant, or financial advisor for someone entering a new phase in life where professional experience could add value and financial wellness for years to come.
6. Upgrade Technology
Contribute to a new computer, tablet, phone, or peripheral equipment for enjoyment or home office use.
7. Boost a Career
Cover the cost of a career coach or professional mentor for someone pursuing advancement or career change.
8. Provide Transportation
Help with the costs of a new car, car repair, or other transportation costs, including adequate insurance coverage for a newly independent driver.
9. Care for a Pet
Assist with a one-time or recurring bill for pet adoption, supplies, grooming, or veterinary care. Providing pet health insurance is possible, too.
10. Encourage Recreation
Buy outdoor equipment for an explorer, like a kayak, skis, or camping gear, especially if they can create memorable experiences like those listed in the first idea on this list.
Leveraging annual exclusion gifts can be a practical way to transfer wealth and support others. By taking advantage of this opportunity, individuals can make a lasting impact on loved ones’ lives. Working with a tax professional or financial advisor can help support compliance with applicable tax regulations and help evaluate strategies for utilizing the annual exclusion.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment or tax advice from Savant. Please consult your investment or tax professional regarding your unique situation.
Christopher A. Ruta
Financial Advisor
CFP®, CPA