Should You Gift Your Adult Kids Money?

Should You Help Out

Your Adult Kids Financially?

Watercolor painting of Old Mission Santa Barbara by Cass Grange

September 2025

Greetings!

Should you gift your adult kids money? It depends. If you have the capacity to do so without hurting your future situation, it is something to consider.

In 2025 a person can give up to $19,000 to any number of individuals without triggering gift tax or requiring a special tax form. Married couples can each give their child $19,000 separately for a total of $38,000 tax-free. [1]

Emotional and financial risks and rewards:

Be clear on your expectations for the gift. If you think you will be resentful of what they spend the gift on, perhaps you shouldn’t give it. You might give guidance on how the funds are used, but the decision ultimately rests with the person receiving the money.

People rarely inherit money when they most need it. Very often, adult children inherit money when they are in their peak earning years, and in a high tax bracket. The average age at which people inherit money is between 50 and 60. [2]

In contrast, helping your kids during their early years can have a lasting impact. Gifting money to adult children from age 25-40 is probably when they need it most. At that age, it may be a lifeline to help with a house down payment, a weekend away from the young children, or just to pay the babysitter for more frequent date nights. If you want to spend more time with your adult children and their families, consider instead paying for the holiday together by renting the VRBO, buying the tickets, taking everyone on a cruise, or paying all the costs for the family reunion. This can help the cousins get to know each other if they live in different cities, and it can be a great investment in family relationships. The time to invest in experiences is while you can enjoy them.

We can help you think through the strategies on gifting and how you may want to structure this, and present it to your family. Click this link to make an appointment.

Sincerely,

Cass, Bleckley, and Megan

[1] https://www.fidelity.com/viewpoints/wealth-management/insights/lifetime-gift-and-estate-tax-exclusions

[2] https://budgetmodel.wharton.upenn.edu/issues/2021/7/16/inheritances-by-age-and-income-group?

Watercolor Wins!

Longtime clients Holly and John Eaton retired this spring. They celebrated by spending a month hiking in southern New Mexico. Now they are busy launching their son, a recent college graduate.

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The One Big Beautiful Bill Act

The OBBBA has been in the news. Here are two changes that are most likely to impact our clients:

State and Local Taxes (SALT) Deduction:
The bill temporarily raises the state and local tax deduction cap to $40,000 for many taxpayers who itemize their deductions. Because Texas does not have state income tax, this will primarily help Texans only with their property taxes, which were previously capped at $10,000.

SALT generally covers:

Personal property taxes, including on homes, vehicles, and boats
Investment property taxes
Either state and local income tax, or general sales tax, but not both

There is a phase-out for high income earners. For 2025, the phase-out range for single and joint tax returns is a modified adjusted gross income of $500,000 to $600,000. Above this range, the deduction is capped at $10,000.

The new, higher SALT deduction cap may allow more taxpayers to itemize their deductions. The increased SALT cap is available from 2025 to 2029.

Enhanced Senior Deduction: Filers age 65 and older receive an “enhanced senior deduction” of $6,000 per person. This deduction applies whether the taxpayer itemizes or takes the standard deduction and is on top of the existing extra standard deduction for seniors, which is $2,000 for individual filers and $3,200 for joint filers.

As with the higher SALT deduction cap, there is an income (MAGI) phaseout range. For joint filers, the phaseout range is $150,000 to $250,000 and for single filers it’s $75,000 to $175,000. Due to the relatively low income phaseout range, many of our clients will not qualify for the full deduction. This deduction is in effect from 2025-2028.

Planning with tax-advantaged accounts will be more important. Many of the new tax breaks that are part of OBBBA come with income limits. Smart planning with tax-advantaged accounts is one way to reduce income and thus preserve a deduction that otherwise would be lost.

For example, a 71-year-old could do a qualified charitable distribution (QCD) from her IRA to both:

Satisfy a required minimum distribution
Preserve eligibility for the SALT deduction and the new enhanced senior deduction

Have questions about the OBBBA? We’re here to help. Just click here to set up a call.

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