What You Should Know About Gifting Limits for 2025

As we come to the end of 2025, it's a good time to look back and see how gifting can play an important role in your estate planning and your legacy goals. For 2025, you can give up to $19,000 per person without even touching your federal lifetime estate and gift tax exemption, which is $13.99 million per individual (or $27.98 million for a married couple). Most families will never pay federal gift tax, but the reporting rules and interaction with your estate plan still matter.

Two reasons this year is worth your attention:

The Annual Exclusion and Lifetime Exemption are at or near record levels in 2025.
Current law is scheduled to change in 2026, so actions you take now can lock in today's higher amounts.

The 2025 annual exclusion

The “headline” number for most people is the annual gift tax exclusion.

In 2025, the annual exclusion is $19,000 per recipient.
You can give $19,000 to as many different people as you like in 2025 with no gift tax return and no reduction of your lifetime exemption.
For married couples who elect gift splitting, the effective per‑donee limit is $38,000 ($19,000 from each spouse).

This limit applies per calendar year, so the clock resets on January 1, 2026. Gifts are valued at fair market value on the date of the gift, and year-end gifts should be completed before December 31st. Remember, for checks, don't rely on holiday mail. Consider using a wire or make sure the check is delivered and deposited in time.

The lifetime gift and estate tax exemption

Larger gifts can still be perfectly fine; they are just handled differently.

In 2025, the unified federal lifetime gift and estate tax exemption is $13.99 million per person, or $27.98 million for a married couple.
If you give more than $19,000 to someone in 2025, the excess simply uses a small slice of your $13.99 million lifetime exemption instead of causing immediate tax.
You report those “excess” gifts on Form 709, but no tax is actually due until your cumulative taxable gifts and estate exceed your remaining exemption.

Because the gift and estate exemptions are unified, large lifetime gifts reduce how much you can pass estate‑tax‑free at death.

Gifts that do not use your limits

Certain gifts are outside the annual exclusion and lifetime exemption altogether when structured correctly.

Direct payments to medical providers for someone else’s care are not taxable gifts and do not use your $19,000 annual exclusion.
Direct tuition payments to an educational institution for someone else are also excluded from gift tax and do not use your annual or lifetime limits.
Charitable gifts to qualifying organizations are excluded from gift tax and may provide income tax deductions, subject to the usual rules.

The key is that payments must be made directly to the provider or institution, not reimbursed to the beneficiary.

Married couples, spouses, and portability

Married couples have some additional planning tools.

U.S. citizen spouses can generally transfer assets to each other without gift tax because of the unlimited marital deduction. Transfers to a non‑citizen spouse do not qualify for the unlimited deduction, but a higher special annual exclusion applies; larger transfers may require a QDOT at death to defer estate tax.
If both spouses agree, they can “split” gifts so that a single large gift is treated as coming half from each spouse, doubling the annual exclusion for that recipient to $38,000 in 2025. Gift‑splitting requires both spouses’ consent and usually means filing Form 709 (often by both spouses) to document the election.
At the federal level, a surviving spouse may be able to use a deceased spouse’s unused exemption through “portability,” which requires a timely estate tax return filing. Portability is elected on a federal Form 706 even if no federal estate tax is otherwise due—missing this election can permanently forfeit the unused exemption.

Transfers to a non‑citizen spouse have their own special annual limit and often require separate analysis and reporting.

Why 2025 is a pivotal year

For higher‑net‑worth families, 2025 is a planning window, not just another calendar year.

The current historically high exemption is scheduled under existing law to change in 2026; many forecasts anticipate a lower exemption than 2025, though Congress could adjust the outcome. Treat 2025 as a “use it or potentially lose it” window.
IRS guidance confirms that making large gifts while exemptions are high will not “backfire” later by creating a penalty when the law changes. This “anti‑clawback” principle means you won’t be penalized for using today’s exemption if the future exemption is lower.

If your net worth is anywhere near the federal exemption, 2025 is an important year to revisit strategies like spousal lifetime access trusts (SLATs), dynasty trusts, and business interest transfers. For closely held business or real‑estate interests, plan for credible valuations; discounts for lack of control/marketability may apply but require support.

Practical tips before you gift

A few simple habits help keep generous gifting from causing tax or administrative headaches.

Track cumulative gifts per recipient each year so you know when you are close to $19,000.
Coordinate large gifts with your broader estate plan, beneficiary designations, and any state‑level estate or inheritance tax exposure.
Work with your tax advisor and estate planning counsel before making large or irrevocable gifts, especially of business interests, real estate, or concentrated investment positions. Document valuations for non‑cash gifts; obtain appraisals where appropriate. Decide which assets to gift with basis in mind (cash vs. low‑basis stock). Remember: gifts are generally irrevocable once completed.

For Minnesota and New York clients (states with an estate tax), the interaction between federal rules and state estate tax thresholds makes this 2025 planning window particularly valuable to address in a customized way.

How Minnesota treats gifting in 2025

Minnesota does not currently have its own gift tax, so there is no separate Minnesota “annual exclusion” amount beyond the federal $19,000 per‑donee limit for 2025. However, Minnesota does impose a state estate tax with a fixed $3,000,000 exemption per person in 2025, which is not indexed for inflation. That means families well below the federal exemption can still face Minnesota estate tax.

For Minnesota decedents dying in 2025, an estate tax return (Form M706) is generally required if the taxable estate plus any taxable gifts pulled back into the estate exceeds $3,000,000. Minnesota’s estate tax rates are graduated, roughly from 13% to 16% on amounts above the $3,000,000 threshold. Example: A $3.4 million estate may owe Minnesota estate tax even though it is far below the federal threshold.

Minnesota’s 3‑year gift “clawback” rule

Although Minnesota does not tax lifetime gifts directly, certain gifts can come back into the picture at death.

Taxable gifts made within three years of death, to the extent they exceeded the federal annual exclusion ($19,000 in 2025), are added back to the Minnesota estate for purposes of determining whether the $3,000,000 exemption is exceeded. Example: A $200,000 gift to a child 18 months before death adds $181,000 to the Minnesota estate calculation for threshold/tax purposes.
This rule is aimed at preventing “deathbed” transfers designed solely to drop a taxable estate under $3,000,000.

Practically, this means larger gifts late in life may still increase Minnesota estate tax, even though no Minnesota gift tax was due when the gifts were made. Direct tuition and medical payments (made to the provider/institution) are not taxable gifts and therefore are not added back.

Extra breaks for Minnesota farms and small businesses

Minnesota offers additional relief for qualifying farm and closely held business property.

In 2025, there is a qualified small business and qualified farm property deduction of up to $2,000,000 per estate.
If all requirements are met, a Minnesota farm or small business owner may be able to shelter up to $5,000,000 total from Minnesota estate tax: the basic $3,000,000 exemption plus up to $2,000,000 of this special deduction. Eligibility depends on ownership period, qualified use/material participation, and post‑death holding periods; transfers or retitling too close to death can jeopardize the deduction.

The farm/business deduction has strict ownership, use, and post‑death holding rules, so clients should coordinate gifts and succession planning carefully to avoid losing the deduction.