A Better Way to Help with Tuition

Another year is here, and that comes with a new school semester and tuition bills for many people. If you’re considering helping a grandchild or other loved one with their college expenses, first take time to review the tax implications. If the total amount you give to the student in 2025 exceeds the annual gift tax exclusion, you might owe gift tax on the excess. In 2025, this exclusion is $19,000 per recipient or $38,000 for married donors who split gifts (up from $18,000 and $36,000, respectively, in 2024).

To avoid tax implications on gifts over the exclusion (or to preserve the exclusion for other gifts), you can pay tuition directly to the school, which qualifies for an unlimited gift tax exclusion. This exclusion applies only to tuition, not to room, board, books or supplies.