A tax-efficient way to transfer wealth

As year-end approaches, you may be thinking about ways to align your estate planning goals with potential tax savings through the gift tax annual exclusion. For 2026, this exclusion is $19,000 per recipient. This means you can give up to $19,000 per recipient in cash or property without using any of your lifetime gift and estate tax exemption. Married couples can give up to $38,000 per recipient by electing to split gifts.

Additionally, married taxpayers can generally make unlimited gifts to a U.S. citizen spouse without gift tax consequences. However, if your spouse isn’t a U.S. citizen, the annual exclusion is limited to $194,000 for 2026. Gifts above that amount generally require filing a federal gift tax return and may reduce your remaining lifetime gift and estate tax exemption.

Which business expenses are still deductible?

Now is a good time for businesses to review expenses and identify potential tax-saving opportunities. While many “ordinary and necessary” business expenses remain deductible, recent tax law changes continue to affect how certain costs are treated.

For example, most entertainment expenses remain nondeductible, while qualified business meals are generally 50% deductible. Qualified transportation costs for business travel are still 100% deductible, but many commuting-related fringe benefits, such as vanpooling and mass transit passes, aren’t. Additionally, employees can’t claim deductions for unreimbursed business expenses, making accountable reimbursement plans increasingly valuable for both employers and employees.

A proactive review of your expenses can help maximize available deductions and support effective tax planning before year end.

Take advantage of education tax breaks

Prepaying qualified education costs may help lower your 2026 tax bill. Eligible taxpayers can claim an American Opportunity Tax Credit (AOTC) of up to $2,500 per eligible student for qualified expenses paid in 2026 for an academic period that begins by March 31, 2027.

Qualifying expenses generally include tuition, required fees and required course materials at an eligible college, university or trade school. You, your spouse or your dependent must be in the first four years of postsecondary education and be enrolled at least half-time in a degree or certificate program. Income limits and other restrictions apply. If you don’t qualify for the AOTC, you may instead be eligible for the Lifetime Learning Credit (up to $2,000 per tax return).

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