How Much Can I Give Away Tax-Free in 2026? A Year-End Gifting Guide for Houston Families

You can give up to $19,000 to any number of people in 2026 without filing a gift tax return or paying any tax. A married couple can give $38,000 per person. Larger gifts almost never create a tax bill either: they're reported on Form 709 and counted against a lifetime exemption of $15 million per person.

As a Houston CPA and financial planner, I get this question every fall, usually from parents and grandparents who want to help family now instead of later. The rules are generous, but they have deadlines and a few traps. The biggest one is that annual exclusion gifts don't carry over. Anything you don't use by December 31 is gone.

This is general education, not advice for your specific situation.

What are the 2026 gift and estate tax limits?

The IRS published the 2026 amounts in Rev. Proc. 2025-32:

The $15 million exemption comes from the 2025 tax law and has no sunset date. It will be adjusted for inflation starting in 2027 (Rev. Proc. 2025-32). "Permanent" in tax law just means nothing is scheduled to expire. Congress can still change it later, as Kiplinger points out.

Texas doesn't add a layer of its own. The state repealed its inheritance tax in 2015 (SB 752), and in November 2025 voters approved Proposition 8, which bars the Legislature from imposing estate, inheritance or gift taxes (Bloomberg Tax).

When would I actually owe gift tax?

For most families, never. A gift over $19,000 doesn't trigger a tax bill. The amount above the exclusion is a "taxable gift" that you report on Form 709, and it reduces your $15 million lifetime exemption. You only pay gift tax once your lifetime taxable gifts go past the exemption (IRS).

The annual exclusion is still worth using, because those gifts never touch the exemption at all. Here's an example. A Houston couple with three married children and six grandchildren has 12 people to give to. At $38,000 each, they can move $456,000 out of their estate in 2026 (from community property or each spouse's own funds) without filing a return or using any exemption, and they can do it again every year. For a family whose estate might one day approach the exemption, that adds up quickly.

What can I give without using my exclusion at all?

Several kinds of gifts are tax-free on top of the $19,000 annual exclusion (IRS):

• Tuition paid directly to the school. There's no dollar limit, and it applies to full-time or part-time students. It doesn't cover books, supplies, dorm fees or board (26 CFR 25.2503-6).
• Medical bills paid directly to the provider. This includes hospitals and doctors, and also health insurance premiums paid on someone's behalf (26 CFR 25.2503-6).
• Gifts to your spouse, if your spouse is a U.S. citizen.
• Gifts to qualifying charities.

The word "directly" matters. If you write the check to your grandson and he pays the university, that's a regular gift that uses your $19,000. If you pay the university's bursar yourself, it's excluded entirely, and you can still give him $19,000 for everything else.

How does a married couple give $38,000 to one person?

There are three ways, and only one of them requires a tax return:

1. Each spouse gives $19,000 of their own money. No return is needed.
2. The gift comes from community property. In Texas, income either spouse earns during marriage is generally community property (Texas Family Code § 3.002). A gift of community property is treated as made half by each spouse (Form 709 instructions), so a $38,000 gift from a joint account built from your paychecks generally counts as $19,000 from each of you.
3. One spouse gives $38,000 of separate property and you elect gift splitting. This works, but you must file Form 709 to split gifts, no matter the amount. Once you elect it, it applies to every gift either of you makes to third parties that year.

Do I have to file a gift tax return?

You don't need to file Form 709 if all of these are true (Form 709 instructions):

• You gave no more than $19,000 to any one person.
• Every gift was a present interest, meaning the person can use it now. Most gifts to trusts are future interests, and they need a return even if they're small.
• You made no gifts to your spouse that need to be reported.

Otherwise, you file Form 709 for 2026 by April 15, 2027. Filing an income tax extension also extends the gift tax return. Filing doesn't mean you owe anything. For most families, the return just tracks how much of the $15 million exemption has been used.

Can I front-load five years of gifts into a 529 plan?

Yes. A special election lets you treat one large 529 contribution as if you made it evenly over five years. At 2026's $19,000 annual exclusion, that's up to $95,000 per beneficiary, or $190,000 for a married couple (Form 709 instructions).

A few rules to know:

• You make the election on Form 709 for the year you contribute, so a return is required.
• Each year's share uses up that year's annual exclusion for the beneficiary. Other gifts to the same person during the five years will count against your lifetime exemption.
• The money can start growing for school years earlier than it would with annual gifts.

Contributions to a child's Trump Account can also qualify for the annual exclusion, and under a new IRS safe harbor many of them don't need a gift tax return (Rev. Proc. 2026-25). I covered the basics of these accounts in my Trump Account post.

Should I give cash, stock or something else?

What you give matters as much as how much. The recipient doesn't owe income tax on a gift (IRS), but they do take over your cost basis for gifted property (IRS Publication 551).

Compare that with an inheritance. Property someone inherits generally gets a new basis equal to its fair market value on the date of death (IRS Publication 551). Here's how that plays out:

Giving appreciated stock to an adult in the 0% capital gains bracket can work well, but the kiddie tax usually rules this out for minors and full-time students under 24.

For highly appreciated stock you plan to hold for life, keeping it to get the step-up is often better than gifting it. For cash or assets with little gain, giving now usually works well. If you've received an inheritance yourself, my inheritance tax guide covers the other side.

Your 2026 year-end gifting checklist

• List everyone you'd like to give to this year, and total the gifts per person
• Make annual exclusion gifts by December 31, 2026. A gift by check generally counts in the year the recipient deposits it, not when you mail it (Rev. Rul. 96-56, summarized by Riker Danzig), so don't wait until the last week
• Pay tuition and medical bills directly to the school or provider
• Decide whether a 529 five-year election makes sense, and plan to file Form 709
• Check whether your gifts come from separate or community property
• Choose cash or low-gain assets for gifts; consider holding highly appreciated stock
• Keep records of each gift: date, amount, recipient and cost basis for property
• Review beneficiary designations and estate documents with your attorney

Gifting fits alongside the other December 31 moves in my year-end tax planning checklist.

How we help

Gifting decisions work best as part of a full picture: your own retirement security, your heirs' tax brackets, and which assets should be given now or left later. At Mercer Street, we work on an hourly, fee-only basis, so you can get a focused gifting review without signing up for ongoing asset management. You can read more about how we work. We coordinate with your estate attorney, who drafts any trusts or legal documents.

Ad hoc planning is billed at $600 per hour with a two-hour minimum. That's usually enough time to map out your 2026 gifts, check the Form 709 requirements and decide which assets to give.

If you'd like to plan your gifts before December 31, schedule a call.