As the holiday season approaches, families across the country prepare to gather, celebrate, and give. While gift exchanges often involve festive packaging and heartfelt gestures, many families embrace a deeper form of generosity — one that blends tradition with financial strategy.
Whether it’s passing wealth to the next generation or aligning charitable giving with shared values, holiday gifting in 2025 carries new significance due to recent changes introduced by laws in the One Big Beautiful Bill Act (OBBBA).
This holiday season offers an opportunity to consider gifting as part of a broader approach to financial planning for families. You can choose to use the holidays as a time to reflect on legacy. Because it’s not just about giving, it’s about what that giving represents.
Gifting to the next generation
One idea to consider is making Thanksgiving a cornerstone of your family’s wealth transfer strategy. For example, when you gather with your children, present them with substantial financial gifts. While the gesture may seem extravagant, it’s rooted in a desire to empower the next generation and foster financial independence.
This kind of gifting isn’t only generous — it’s also strategic. In 2025, the annual gift tax exclusion increased to $19,000 per recipient, up from $18,000 in 2024. For married couples, that means $38,000 per person in tax-free gifting.
When done consistently, this approach can reduce the size of an estate over time, potentially minimizing future estate tax liabilities.
But beyond the tax benefits, holiday gifting creates a moment of connection. It’s a chance for parents to share their values, discuss financial goals, and model responsible stewardship.
Charitable giving as a family affair
Another idea to consider is using the holidays to convene and decide where to give charitably instead of rather than gifting directly to family members. The entire family participates in selecting causes, researching organizations, and allocating funds. It’s a collaborative process that turns giving into a shared experience.
This tradition reinforces philanthropic values as well as teaches younger family members about social responsibility. It encourages dialogue around issues that matter and helps instill a sense of purpose. If you’re a family with donor-advised funds (DAFs) or private family foundation, this kind of holiday meeting can be a powerful way to engage the next generation in long-term charitable giving strategies.
Starting in 2026, taxpayers who take the standard deduction will be able to deduct up to $1,000 (single) or $2,000 (married filing jointly) for cash gifts made directly to qualified operating charities. While this new universal deduction excludes DAF contributions, the law still encourages broader participation in charitable giving.
For itemizers, OBBBA 2025 permanently raises the 60% AGI limit for cash donations to public charities. It also adds a 0.5% AGI floor. This means only donations above that amount can be deducted. High-income donors in the 37% tax bracket will also see their deduction benefits capped at 35 cents per dollar, starting in 2026.
Why gifting matters more this year
The OBBBA permanently increases the lifetime estate and gift tax exemption to $15 million per individual and $30 million per couple, indexed for inflation, starting in 2026. This change eliminates the sunset provision from the 2017 Tax Cuts and Jobs Act, which would have reduced the exemption to around $7 million per person in 2026.
For high-net-worth families, this means more flexibility in estate planning and wealth transfer. But it also creates a strategic window: by gifting in 2025, individuals can take advantage of the current rules before new thresholds and deduction caps take effect in 2026.
This year’s holiday season is a good time to revisit gifting plans. Ask yourself: What do I want my legacy to be? And how can I use gifting in my legacy planning?
A call to action
If you’re considering a one-time gift or establishing a recurring tradition, here are a few steps to get you started:
- Reflect on your goals: Are you hoping to support your children’s financial independence? Reduce your taxable estate? Make a charitable impact? Clarifying your intentions will help guide your strategy.
- Consult your financial advisor: Understand the tax implications, legal considerations, and long-term effects of your gifts. The OBBBA introduces new rules that may affect your approach.
- Engage your family: Whether you’re giving directly or charitably, involve your loved ones in the process. Share your values, explain your choices, and encourage open dialogue.
- Document your plan: Keep records of your gifts, especially if they exceed annual exclusions or involve complex assets. This ensures compliance and helps avoid misunderstandings.
- Celebrate the moment: More than a transaction, gifting is a celebration of love, legacy, and generosity. Make it meaningful by tying it to your family’s traditions and values.
Final Thoughts
Holiday gifting is a powerful way to express care, build legacy, and make a difference. With thoughtful planning and the right tools, it can also be a smart financial move for gift and estate taxes. Gifting isn’t just about what you give. It’s about why you give and how that giving shapes your family’s future.
This year, consider making gifting part of your holiday tradition. Your generosity can reach far beyond the season. It can be cash for your children, donations to causes you care about, or even a talk at the dinner table. Your Mercer Advisors wealth advisor can help you determine the right approach for you and your family.
At Mercer Advisors, we include gifting strategies as part of a comprehensive wealth management solution. If you’re not a client and want to know more about building or protecting your legacy, let’s talk.
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