With the holidays around the corner, you’re probably making a list (and checking it twice) of which gifts to give your loved ones. Many people take this time of year to make big gifts—money, a car, or another valuable asset—as a way to help a loved one get ahead or simply show gratitude.
While those generous gifts come from the heart, how and when you give them can make a big impact on your taxes and your estate plan. Even donating to your favorite charity can become a win-win situation when done strategically. With new tax laws set to change in 2026, now is the time to plan ahead.
Before you give a big gift this holiday season, here are some strategies for estate planning that can help you reduce taxes and make your generosity go further.
The Benefits of Giving Now
When someone passes away, estate taxes are paid by their estate, not the people receiving the inheritance. That means taxes can take a big portion out of what your loved ones actually receive.
By making gifts while you’re still alive and in control, any taxes that may apply are your responsibility, not your heirs’. Plus, gifting now helps lower the total value of your taxable estate later.
In 2025, you can gift up to $19,000 per person per year without paying any gift taxes. If you’re married, you and your spouse can jointly give $38,000 per person tax-free. You can give it to as many people as you want — children, grandchildren, friends, or any loved one. If you wish to gift more, you will need to report it to the IRS, but you won’t owe taxes right away. Instead, that total amount will count towards your lifetime exemption, which is the total you can give or leave behind in your lifetime without paying federal estate or gift taxes.
For 2025, that exemption is $13.61 million per person, or $27.22 million for married couples. On January 1st, 2026, this exemption is set to drop to around $5 million per person. By gifting now, you can reduce the size of your taxable estate and take advantage of the current higher exemption limit.
Gifts that can be considered taxable include cars, properties, land, real estate, stocks, bonds, and business ownership. However, certain types of gifts are not taxable, such as tuition payments, medical expenses, or qualifying donations.
If you plan to gift your home, you can learn more how to strategically gift it in our blog.
Charitable Gift Giving
Donating to a charity can be a powerful way to make an impact and also offers tax benefits. When you give to a qualifying charity, you’re not only supporting a cause you care about, but you are also reducing your taxable income and your estate taxes. Here are a few charitable giving strategies to reduce your estate:
- Donate now: you will reduce your taxable income for life.
- Donate assets: you can donate cash, stock, property, and life insurance.
- Set up charitable trusts: this allows you to receive income from taxes during your lifetime before the remainder goes to charities.
So, how can you include charitable giving in your estate plan? You can make annual donations, name a charity as a life insurance beneficiary, or include a charitable trust in your estate plan. These strategies ensure that your generosity continues to make an impact long after the holidays are over.
Start Planning Today
This holiday season, make sure your gifting is tied to your estate planning strategy. When done thoughtfully and strategically, giving can be a win-win: you support a loved one, reduce your future taxes, and create a legacy that lasts for generations.
If you are planning on leaving a meaningful gift this season, contact us today. Our team is here to help you plan strategically so no money is wasted today or when you are no longer around. Call us at (256) 251-2137, or get in touch with us by completing the brief form below.