How to Use Gifting Strategies Before Year-End to Reduce Estate Taxes
The holidays are a season of giving. For many families, that generosity extends beyond presents under the tree. Smart financial gifting can reduce your taxable estate, provide meaningful support to loved ones, and even create opportunities for charitable impact.
Annual Gifting Exclusion
In 2025, you can give up to $19,000 per person without triggering federal gift tax or using your lifetime exemption. Couples can give $38,000 per person. For families with multiple children or grandchildren, these gifts can add up quickly.
Why Gifting Works
- Reduces the size of your estate: Less exposure to state estate tax payable to Washington (current threshold of $3 million) or Oregon (current threshold of $1 million) estate taxes, or even federal estate tax (current threshold of $13.99 million)
- Provides immediate benefit: Loved ones can use the money now, for education, housing, or life expenses
- Lets you enjoy generosity during your lifetime: You can see the impact of your gifts rather than leaving everything for later
Beyond the Annual Limit
- Education and Medical Payments: Payments made directly to a provider for tuition and medical expenses are unlimited and don’t count toward the annual exclusion.
- Lifetime Exemption Gifts: If your estate is above the state thresholds, especially when below the federal estate tax exemption, larger lifetime gifts may make sense.
Charitable Gifting
Year-end is also an ideal time to support charities that are important to you. Gifting outright, through donor-advised funds or charitable remainder trusts, or qualified charitable distributions (QCDs) through your IRA, can provide income tax deductions, reduce estate size, and leave a legacy of generosity.
Timing Matters
Gifts must be completed by December 31st to count for the 2025 year. That means checks deposited, transfers made, or paperwork submitted before the ball drops on New Year’s Eve!
Peace of Mind Through Planning
Year-end gifting isn’t just a financial strategy—it’s an opportunity to align your resources with your values. At Pettis Webber Pacific, we help families across Washington and Oregon design gifting plans that maximize the benefits of the gifts and reflect what matters most.
If gifting is part of your vision, let’s build a strategy together that protects your family and reduces unnecessary taxes.