Gift Tax Planning in 2025–2026: Unlimited Gifting Strategies Most Taxpayers Overlook
High-income individuals, business owners, creators, and professionals often assume that once they hit the annual or lifetime gift tax limits, additional gifting becomes taxable. In reality, U.S. tax law provides several powerful gifting categories that are completely excluded from both the annual and lifetime gift tax limits—if structured correctly.
At Velin & Associates, Inc., we regularly help CPA for Doctors, CPA for High Net Worth Individuals, CPA for Creators, CPA for Amazon Business owners, and dental and medical practice owners design gifting strategies that transfer significant wealth while minimizing gift and estate tax exposure.
This article explains the most important unlimited gift tax exclusions for 2025 and 2026, common mistakes to avoid, and practical examples based on scenarios we see with our clients.
Annual and Lifetime Gift Tax Exclusions: The Baseline
Before discussing unlimited gifts, it’s important to understand the standard limits:
- Annual gift tax exclusion
- $19,000 per recipient for 2025 and 2026
- $38,000 for married couples filing jointly
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- Lifetime gift and estate tax exemption
- $13.99 million in 2025
- $15 million in 2026
Most gifts reduce either the annual exclusion or the lifetime exemption—unless they fall into one of the special categories below.
1. Unlimited Tuition Payments Made Directly to Schools
One of the most powerful and misunderstood planning tools is the education exclusion.
How It Works
You may pay an unlimited amount of tuition for another person without using any annual or lifetime gift exclusion, as long as:
- The payment is made directly to the educational institution
- The expense is tuition only
Both full-time and part-time students qualify.
What Does Not Qualify
- Room and board
- Books and supplies
- Student housing
- Meal plans
If tuition money is gifted to the student instead of paid directly to the school, it becomes a taxable gift.
Example:
A high-earning YouTuber working with our CPA for Creators team paid $62,000 per year for a child’s private university tuition. Because the payments were made directly to the school, none of this reduced the client’s lifetime exemption. The client also gifted an additional $19,000 annually for living expenses.
2. Unlimited Medical Expense Payments Made Directly to Providers
Medical payments are another unlimited exclusion when structured correctly.
Qualifying Medical Expenses
- Hospital bills
- Surgeries
- Dental procedures
- Long-term care
- Insurance premiums
- Prescribed treatments
Non-Qualifying Expenses
- Cosmetic procedures
- Wellness programs
- Elective treatments not considered medical care
Key Rule
Payments must be made directly to the medical provider or insurance company, not reimbursed to the individual.
Example:
A dentist and dental practice owner assisted aging parents by paying $145,000 in long-term care and medical expenses directly to providers. None of these payments counted toward gift tax limits—preserving the client’s estate plan while providing essential care.
3. Gifts Between Spouses: Unlimited—With Conditions
U.S. Citizen Spouses
Unlimited gifts are allowed only if all three conditions are met:
- Donor and recipient are married at the time of the gift
- Recipient spouse is a U.S. citizen
- The gift is not a terminable interest (must transfer full ownership)
Non-U.S. Citizen Spouses
If the recipient spouse is not a U.S. citizen:
- Annual exclusion is limited to:
- $190,000 in 2025
- $194,000 in 2026
Example:
A medical practice owner married to a non-U.S. citizen worked with our CPA for Doctors team to structure annual transfers under the special exclusion while avoiding inadvertent taxable gifts.
4. Charitable Gifts That Never Trigger Gift Tax
Qualified Charities
Gifts to IRS-recognized 501(c)(3) organizations:
- Are not subject to gift tax
- Do not reduce annual or lifetime exclusions
What Does Not Qualify
- Gifts to 501(c)(4) or 501(c)(6) organizations
- Contributions to personal fundraisers (e.g., GoFundMe)
- Donations to individuals, even for charitable causes
5. Donor-Advised Funds (DAFs): Front-Loading Charitable Deductions
Donor-advised funds allow high-income taxpayers to:
- Make unlimited charitable gifts
- Claim the deduction in the year of contribution
- Distribute funds to charities over time
Additional Advantage
Appreciated assets (stocks, crypto, business interests) can be donated:
- Deduction based on fair market value
- No capital gains tax on appreciation
Example:
An Amazon Business CPA client donated appreciated stock to a donor-advised fund before selling a business. The strategy eliminated capital gains and created multi-year charitable giving flexibility.
6. 529 Plans vs. Direct Tuition Payments
How 529 Plans Are Treated
- Contributions are considered gifts
- Growth is tax-free if used for qualified education expenses
- Best used when funds have time to grow
Strategic Planning Tip
As children near college age, it’s often better to:
- Pay tuition directly to the school
- Preserve annual gift exclusions for later estate planning
Example:
A CPA for High Net Worth Individuals client redirected planned 529 contributions into direct tuition payments, saving gift exclusion capacity for future wealth transfers.
Common Gifting Mistakes We See
At Velin & Associates, we frequently help clients correct costly errors:
- Paying tuition or medical bills indirectly
- Assuming all nonprofits qualify
- Overfunding 529s too late
- Making spousal gifts without verifying citizenship rules
Each of these mistakes can trigger unnecessary gift tax reporting or reduce lifetime exemptions.
Why Gift Planning Matters for Business Owners and Creators
Whether you are a:
- for Shopify Store owner
- for Online Commerce entrepreneur
- for Filmmakers or TikTokers
- for Dental Practice or Medical Practice
- for Amazon Business
Gift tax planning is not just about generosity—it’s about preserving wealth, minimizing estate taxes, and avoiding audits.
Final Thoughts
Unlimited gifting opportunities exist—but only when executed precisely. Tuition, medical payments, charitable giving, and spousal transfers can move substantial wealth outside your taxable estate without touching gift tax limits.
At Velin & Associates, Inc., we help clients integrate these strategies into broader tax, estate, and business planning—ensuring every dollar is transferred intentionally and efficiently.
For more information about our tax planning services, contact us today: visit our website.
Velin & Associates, Inc
8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org
CPA for YouTubers | CPA for Shopify Store | CPA for Online Commerce | CPA for Creators | Shopify Store CPA | CPA for Filmmakers | CPA for Amazon Business | Amazon Business CPA | CPA for Dental Practice | Dentist CPA | Dental Business CPA | Online Commerce CPA | CPA for TikTokers | CPA for Doctors | CPA for Medical Practice | CPA for High Net Worth Individuals
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.