Every person in the U.S. has a lifetime exemption that lets them give away a substantial amount of money or property, during life or at death, before federal gift and estate tax applies. In 2026, that exemption sits at $15 million per individual, or $30 million for a married couple who plan together. Anything above that threshold is generally taxed at the top estate and gift tax rate, so understanding how to use the exemption deliberately matters more than most people realize.
Part of our guide: Crypto Taxes.
Two Ways to Use the Exemption
You can use it in small pieces every year through the annual exclusion, or in large chunks through lifetime gifting or your estate at death.
The annual exclusion lets you give $19,000 per recipient per year without touching your lifetime exemption or filing anything with the IRS. Give that amount to three kids, their spouses, and a handful of grandchildren, and you can move well over $100,000 out of your estate every single year, tax-free, without using an inch of the larger exemption. Married couples can combine their individual exclusions to give twice as much to the same person, a technique called gift splitting, though electing it means filing a return even where no tax is owed.
Gifts above the annual exclusion do count against your lifetime exemption, and you’ll need to file Form 709 to report them, but no tax is actually owed until you exceed the full lifetime amount.
The Exclusions People Miss
Two routes move money to family without using either allowance, and both are underused because they sit outside the system rather than inside it.
- Tuition and medical expenses paid directly to the school or the provider fall outside the gift tax system entirely. The payment has to go straight to the institution rather than through the person you are helping, and that single detail is what people get wrong.
- A 529 education account can be funded with several years of annual exclusions at once under a specific election, which front-loads the growth into the account rather than spreading it.
Neither consumes annual exclusion or lifetime exemption when done correctly, so they belong at the top of the list rather than as a footnote to it.
Why the Old Deadline No Longer Applies
The exemption was scheduled to be cut roughly in half after 2025, and that reversion was repealed before it took effect. Legislation enacted in 2025 set the exemption at $15 million per person for 2026 and made the higher level permanent, so gifting decisions can be made on their own merits rather than against a countdown. If you are sitting on significant appreciated assets, the reasons to move them early are now growth outside your estate and control of the terms, not a deadline.
The Basis Tradeoff
The basis tradeoff between lifetime gifting and leaving assets at death is worth understanding before gifting appreciated assets during your lifetime instead of waiting. Assets you gift while alive carry over your original cost basis to the recipient, so they inherit your capital gains exposure along with the asset. Assets left at death instead get a step-up in basis to fair market value, which can eliminate capital gains tax on all the appreciation that happened during your lifetime. That doesn’t mean lifetime gifting is wrong; it means the decision should weigh the estate tax exemption against the capital gains consequences, not just look at one side of the ledger.
Structures That Stretch the Exemption Further
Family limited partnerships and similar structures can stretch the exemption further by letting you gift a minority, non-controlling interest in an asset at a valuation discount, since a partial stake with no control and limited marketability is genuinely worth less than a proportional slice of the whole. That discount effectively lets you move more value out of your estate for the same amount of exemption used, though it requires careful, defensible valuation work to hold up if the IRS reviews it.
Talk to an estate planning attorney before making any large gift. The exemption amount, filing requirements, and available strategies all shift with tax law, and getting the mechanics wrong can turn a well-intentioned gift into an unnecessary tax bill.
Educational only, not tax, legal, or investment advice. Check primary sources and speak with a qualified professional before making financial decisions.
Part of our guide: Crypto Estate Planning.
