Year-End Gifting and the Annual Exclusion: A New Hampshire Family’s Guide to Tax-Free Giving

On Behalf of Sowerby & Moustakis Law

Quick Summary

Year-end gifting can be a simple way to help children, grandchildren, or other loved ones while reducing future transfer-tax exposure. For 2026, the IRS annual gift-tax exclusion is $19,000 per recipient, and married couples may be able to double that with proper planning. This article explains what New Hampshire families should understand before making holiday-season gifts, including when a gift tax return may still be required.

The end of the year is when many families finally act on something they meant to do months ago.

“Let’s just write the checks before December 31.”

Sometimes that is a perfectly good move. Sometimes it leaves out the part that matters most: what the gift is supposed to accomplish inside the larger estate plan.

What The Annual Exclusion Means In 2026

For 2026, IRS guidance lists the annual gift-tax exclusion at $19,000 per recipient.

That means an individual can generally give up to $19,000 to as many different recipients as they want during 2026 without using lifetime exclusion and without filing a gift tax return solely because of those present-interest gifts.

Married couples often think about this together. IRS gift-tax FAQs explain that each spouse is entitled to the annual exclusion amount, which means a couple may be able to give up to $38,000 per recipient in 2026 if the gifting is structured properly.

At the surface level, that seems simple.

The hidden problem is that many families stop at the number and never ask whether the gift matches the bigger plan.

For estate-planning background, see the Sowerby & Moustakis Law page on estate planning.

The Annual Exclusion Is Per Recipient, Not Per Year In Total

This is one of the most helpful features of the rule.

If one person gives $19,000 in 2026 to each of three children and two grandchildren, the exclusion applies separately to each recipient.

That does not mean every gift is wise just because it fits under the exclusion. It means the federal gift-tax system allows families to move a meaningful amount each year without immediately using lifetime exclusion for those gifts.

Gifts Above The Exclusion Do Not Automatically Mean You Owe Tax Right Away

This is where people get nervous for the wrong reason.

A gift above the annual exclusion may require a Form 709 gift tax return, but that does not automatically mean tax is due immediately. The annual exclusion and the larger lifetime transfer-tax system work together.

In other words, “reportable” and “taxable right now” are not always the same thing.

That is one reason casual advice from family members or social media can be misleading. The paperwork question and the tax-due question are not identical.

Gift Splitting Can Help Married Couples, But It Is Not Automatic

Spouses often assume that if they are married, the IRS will simply treat one spouse’s gift as half from each.

Not so fast.

IRS materials on gift splitting explain that if spouses elect to split gifts, they generally must follow the required reporting rules and treat the election consistently for gifts made to third-party donees during that calendar year.

This is useful for families making larger year-end gifts, but it is not something to assume without checking how title, source of funds, and reporting all line up.

Direct Tuition And Medical Payments Follow Different Rules

This is one of the most useful planning points for grandparents and parents.

IRS Publication 559 explains that payments made directly to an educational institution for tuition or directly to a medical provider for qualifying medical expenses are generally not treated the same way as ordinary taxable gifts for annual-exclusion purposes.

That means a family may be able to help with tuition or medical bills without using the ordinary annual exclusion in the same way a cash gift would.

The word “directly” matters here. Reimbursing someone after the fact may not have the same result as paying the school or provider directly.

A Gift Should Still Fit The Family’s Own Needs

This is where legal judgment matters more than tax headlines.

A year-end gifting strategy should account for:

• Your own future cash-flow needs
• Long-term care planning concerns
• Whether a recipient is financially responsible
• Whether the gift should go outright or into trust
• Whether unequal gifts will create family tension
• Whether the assets being gifted carry valuation or control issues

For some families, the best year-end move is a simple cash gift.

For others, the better question is whether gifting belongs inside a trust strategy, business-succession plan, or long-term care plan.

If you are also reviewing older estate documents, it may help to read the firm’s case study on an outdated trust leading to years of family conflict.

Business Interests And Other Non-Cash Gifts Need More Care

Cash gifts are one thing. Business interests, real estate interests, and other hard-to-value assets are another.

If the gift involves an LLC interest, a family business, or a piece of real estate, the year-end timing may be less important than making sure the transfer is documented, valued, and coordinated correctly.

Families with a business owner in the mix may also need to think about governance and succession, not just gifting. See the firm’s page on small business law.

What Families Should Ask Before Making Year-End Gifts

Before making late-December gifts, ask:

• What is the purpose of the gift?
• Is this a simple cash-support gift or part of a larger estate plan?
• Will the gift create any reporting requirement?
• Would a direct tuition or medical payment make more sense?
• Is the recipient the right person to receive the asset outright?
• Are we still protecting our own long-term needs?

Those are estate-planning questions, not just tax questions.

Why This Topic Matters Even For Families Far Below The Federal Estate Tax Threshold

Many New Hampshire families will never owe federal estate tax.

That does not make gifting irrelevant.

Lifetime gifts can still shape how and when wealth moves, whether children receive help at the right time, whether a family business transitions smoothly, and whether older parents keep enough flexibility for their own care needs.

The annual exclusion is useful. It is just not the whole strategy.

Use The Rule, But Use It Deliberately

The best year-end gifting plans are not rushed gifts made only because the calendar is about to turn.

They are gifts that support the family, fit the larger estate plan, and avoid creating new problems.

If you are thinking about year-end gifts, trust planning, or how to get your affairs in order before 2027 begins, call Sowerby & Moustakis Law at (603) 249-5925, email info@smlpllc.com, or visit our contact page.