For tax year 2025 and 2026, the annual gift tax exclusion is $19,000. It is important to note that a taxpayer paying for medical care directly to a healthcare provider/institution on behalf of another and/or education expenses directly to an educational establishment on behalf of another (i.e. tuition) does not need to file a gift tax return for these types of contributions.

Qualifying medical expenses would include diagnosis, treatment or prevention of a disease, medical insurance premiums and long- term care services such as nursing home or assisted living facilities. Non- qualifying medical expenses would include amounts reimbursed by the donee’s insurance, elective cosmetic surgery, and general wellness expenses such as a gym membership (unless prescribed by a physician for a specific condition).

If a taxpayer pays for school room/ board on behalf of another, the contribution amount does not fall under the exception noted above and a potential gift tax filing may be required.