Year-End Gift Giving Guide

By Callie Morgan, CFP®

‘Tis the season to be generous, and nothing says “Merry Christmas” like a well-planned gift that warms hearts and saves on taxes. There are many financial strategies beyond traditional gifts that allow an individual to spread joy while optimizing tax benefits. Whether you’re aiming to support family members, express gratitude, or optimize a tax strategy, we’d love to offer this short guide to make your year-end giving both joyful and financially savvy.

Key Benefits of Year-End Financial Gifting

• Reduce Taxable Estate
• Provide Financial Support
• Charitable Contributions and Tax Deductions
• Share Wealth During Lifetime

Strategies for Effective Financial Gifting

• Cash is King, but the IRS can be Grinchy
  • Giving cash is the easiest way to spread cheer, but Uncle Sam has his eye on your generosity. Here’s how to keep it merry:
    • You can give up to $19,000 per person ($38,000 per married couple) in 2025 without paying gift tax. That means you can be Santa to as many people as you like, but try not to exceed the limit, or the IRS will ring the tax bells!
• Stocking Stuffers: Gifting Appreciated Stock
  • Got some hot stocks that have been sitting in your portfolio like a fruitcake no one wants to eat? Donate them instead!
    • If you gift appreciated stock to a family member, they inherit your cost basis. (Lucky them!) If they’re in a lower tax bracket, it’s a win-win.
    • If you gift appreciated stock directly to a qualified charity, you can avoid paying capital gains tax and can receive a tax deduction. Make sure the charity is tax-exempt (501(c)3).
• Charitable Contributions: Santa’s Big Heart
  • The spirit of giving feels even better when it comes with a deduction. Here are some ways to give big and save bigger:
    • Charities love cash almost as much as Santa loves cookies. You can generally deduct cash gifts up to 60% of your adjusted gross income (AGI) – make sure to get a receipt.
    • Set up a Donor-Advised Fund (DAF) to make charitable contributions now and decide where the money will go later. It is like Christmas shopping on layaway but with a tax deduction up front.
    • If you’re over 70 ½, you can donate up to $108,000 in 2025 directly from your IRA to a qualified charity and keep it out of your taxable income.
    • Instead of small gifts each year, you can bundle multiple years’ worth of charitable donations into a single tax year to exceed the standard deduction ($15,750 for single filers and $31,500 for married filing jointly in 2025).
    • You can make a charitable gift in someone else’s name – because nothing says “I love you” like letting them take the credit. You’ll feel good, they’ll feel good, and the charity wins too. Plus, you receive the deduction!
• All I want for Christmas is No Student Debt!
  • Contributing to a 529 plan for your favorite future scholar is the ultimate gift that keeps on giving – Kind of like your neighbor’s inflatable Santa that has been up since October, but way more appreciated.
    • Superfund a 529 plan by contributing $95,000 in 2025 (or $190,000 as a couple) and spread it over five years to avoid the gift tax.
  • Got a college student on your list? Pay their tuition directly to the school, and it does not count against your annual gift tax exclusion. It’s like giving Rudolph a fast pass-through holiday traffic – efficient and totally tax-free! Make sure the payment goes directly to the educational institution to get the break.
• Have Yourself a Healthy Little Christmas
  • Feeling extra generous this holiday season? Covering someone’s medical expenses is one of the most thoughtful gifts you can give – especially when it comes with a side of tax savings.
    • If you pay someone’s medical bills directly to the healthcare provider, it does not count as a taxable gift. That means it will not eat into your annual gift exclusion or your lifetime exclusion. To keep it tax-free, the payment must go directly to the medical provider, not the patient. Think of it as delivering your gift straight down the chimney rather than leaving it on the porch.
• Giving the Gift of Time: Volunteer Work
  • Your time is precious, and while the IRS won’t give you a deduction of hours well spent volunteering, the mileage to and from charitable work may be deductible. Sleigh your way to savings with .14 cents per mile (2025 rate), it is not much, but every little bit helps.

Final Thoughts

Giving can feel like navigating a tangled mess of Christmas lights, but with a little planning and the right strategy, you will spread cheer without getting Grinched by the IRS. When in doubt, consult your financial advising team – because nothing says “Happy Holidays” like staying on the IRS’s Nice List!

The information provided in this article is for general informational purposes only and should not be construed as financial advice. Before making any financial decisions, it is strongly recommended that you consult with a certified financial planner™, attorney, accountant, or another trusted financial professional to assess your individual circumstances.

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