As Gen Z and Millennials continue to struggle with financial stability, a growing number of families are looking for practical ways to support younger generations without creating tax headaches. According to Deloitte’s 2025 data, nearly half of Gen Z and Millennials feel insecure about their finances, and more than half are living paycheck to paycheck.
What many Baby Boomers don’t realize is that they have a powerful, tax-efficient tool at their disposal: the annual gift tax exclusion.
For 2025, individuals can give up to $19,000 per recipient—no strings attached and no tax consequences.
A Generous Way To Transfer Wealth
Financial planners at Serae Wealth say this is one of the most underused strategies among affluent Boomers. The $19,000 limit applies per person, and there’s no cap on how many people can receive a gift.
Joe Anderson, senior wealth manager and founding partner, explains it this way: a grandmother could gift $19,000 to her child, $19,000 to that child’s spouse, and $19,000 to each of two grandchildren, adding up to $76,000 in tax-free giving. A spouse could match the same gifts, pushing the total to $152,000 for that one family.
For younger recipients, a tax-free infusion like this can be transformative. It could pay down high-interest debt, help fund a business idea, cover major purchases like a vehicle, or contribute to a down payment on a home.
What Happens if You Give More Than $19,000?
Even if someone wants to make a larger impact with a bigger gift, they still won’t pay immediate taxes. Instead, any amount over the annual exclusion simply reduces the giver’s lifetime estate and gift tax exemption.
In 2025, that lifetime exemption stands at $13.99 million per person. In 2026, it rises to $15 million. Because each spouse receives their own exemption, a married couple will have a combined $30 million limit next year before federal gift or estate taxes come into play.
Senior wealth manager Scott Hefty breaks it down with an example: if a parent gives $100,000 to a child in 2026, the first $19,000 falls under the annual exclusion. The remaining $81,000 counts toward the parents’ lifetime exemption.
There’s no tax due at the time of the gift, but it must be reported on IRS Form 709 so the IRS can track cumulative lifetime gifting.
Only when total lifetime gifts exceed the full exemption would federal gift or estate taxes apply and those taxes can be steep, with a current top rate of 40%.
Don’t Forget State Rules
While these rules apply federally, individual states may have additional taxes. States like Texas and California do not levy estate or inheritance taxes, while others, including Pennsylvania and Massachusetts, do.
Why Planning Matters
Wealth planners emphasize that gifting should be done with intention. Acting strategically helps Boomers support family members without jeopardizing their own long-term financial security.
“By understanding the rules and planning ahead, families can make meaningful financial gifts while avoiding unnecessary tax complications,” Anderson says.
For many families, this overlooked $19,000-per-person rule may be one of the simplest ways for older generations to lift some of the financial burden weighing on Gen Z and Millennials today.
