Wealth Management

Your 2026 Guide to Holiday Giving

As you reconnect with loved ones for the holidays, consider these impactful ways to give.

Key Takeaways

  • The holidays can be an opportunity to support loved ones, contribute toward education, and give to causes that reflect your values.
  • In 2026, you can give up to $19,000 to each recipient without using part of the lifetime federal gift and estate tax exemption, and married couples can generally give up to $38,000.
  • A donor-advised fund can allow you to make a charitable contribution now, potentially qualify for a federal income tax deduction, and recommend grants to eligible charities over time.
  • Donating appreciated assets or making a qualified charitable distribution from an IRA may offer different tax considerations than giving cash.
  • A 529 education savings plan can help you give toward a loved one’s qualified education expenses while offering potential federal tax advantages.

Along with holiday celebrations and family gatherings, the spirit of giving helps make this season so magical. For many, that includes giving not only to family and friends but also to charities aligned with your values.

Here are some financially smart strategies to help you support the people and causes you value most.

How much can you give a family member in 2026?

In 2026, you can generally give up to $19,000 to each recipient without using part of your lifetime federal gift and estate tax exemption. Married couples who elect to split gifts can generally give up to $38,000 per recipient. Gifts above the annual exclusion generally must be reported on a federal gift tax return and may count against the donor’s $1 million lifetime federal gift and estate tax exemption. 

Can you contribute to a 529 education savings plan?

Yes, a 529 education savings plan can help you give toward a beneficiary’s qualified education expenses. Earnings can potentially grow free from federal income tax, and withdrawals are generally exempt from federal income tax when used for qualified expenses. State tax treatment and the range of eligible expenses can differ, so the plan and beneficiary’s circumstances matter.

Anyone, including a grandparent, can contribute. In 2026, an individual can generally contribute up to $19,000 per beneficiary, or $38,000 for married couples electing to split gifts, without using part of the lifetime gift and estate tax exemption. A special election may also allow an individual to front-load five years of annual exclusions, contributing up to $95,000 at once, or $190,000 for a married couple electing to split gifts, provided the required federal gift tax election is made and other requirements are met.

How can a donor-advised fund support tax-efficient giving?

A donor-advised fund (DAF), such as the Morgan Stanley Global Impact Funding Trust (MS GIFT), can support tax-efficient giving by allowing you to make a charitable contribution now and potentially qualify for a federal income tax deduction in the year of the contribution, subject to applicable limitations, and recommend grants to eligible charities over time.1 The assets donated to the DAF can then stay invested and potentially grow, tax-free with respect to federal income tax, until you recommend which charities you want to receive a cash donation, giving you and your family time to decide where your gift could have the greatest impact.

Can you donate appreciated assets?

Yes, if you’ve been investing for a while, you may hold securities that have appreciated significantly, and donating them may help to relieve the potential tax hit from capital gains that you might otherwise incur by selling the securities and subsequently donating the cash.

Can you donate retirement assets through a qualified charitable distribution?

If you’re at least 70½, you may be eligible to make qualified charitable distributions, or QCD, directly from an individual retirement account (IRA) to an eligible charity. For 2026, the annual QCD limit is $111,000 per individual. A qualifying distribution is generally excluded from federal taxable income and can count toward a required minimum distribution for the year, if applicable. QCDs generally come with no federal tax costs to you or the charity receiving the donation—allowing you to count a QCD toward your required minimum distribution for the year if certain rules are met, reduce your taxable estate, and feel good about supporting a cause you care for.2

How did 2026 tax law changes affect charitable deductions?

Starting in 2026, the One Big Beautiful Bill Act (OBBBA) limited the tax benefit of itemized charitable deduction to 35% for taxpayers in the top federal income tax bracket. The OBBBA also imposed a floor on deductions for donations by individuals, such that charitable contributions will only be deductible to the extent that they exceed 0.5% of the taxpayer’s adjusted gross income.3

How can a Morgan Stanley Financial Advisor help with holiday giving?

A thoughtful giving plan should support the people and causes you value without losing sight of your own financial goals. A Morgan Stanley Financial Advisor can help you evaluate how a gift to loved ones or charitable donations may fit within your overall financial plan, including partnering with your tax and legal advisors.

Find a Financial Advisor, Branch and Private Wealth Advisor near you.

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Footnotes:

1 The federal income tax deductibility of contributions to a donor-advised fund are subject to certain limitations. These may include but may not be limited to: Donating long-term appreciated securities may be eligible for a federal income tax deduction of the full fair-market value of the asset, up to 30 percent of adjusted gross income (AGI). Donating cash may be eligible for a maximum federal income tax deduction of 60% of AGI. For long-term appreciated gifts of artwork, antiques, books and other tangible personal property, the deductibility rules depend on how the qualifying charity uses the gift. There are additional asset classes and types of contributions which may have additional and/or different limitations. Also, the tax deduction is only available for taxpayers who itemize deductions. Clients should consult with their tax advisor on the income tax implications and tax planning around gifting activity.

2 One thing to keep in mind is that the SECURE 2.0 Act raised the starting required minimum distribution (RMD) age to 73 for individuals born on January 1, 1951, through and including December 31, 1959. As a reminder, ongoing SIMPLE and SEP IRAs (including SAR-SEP IRAS) are not eligible for QCDs. An SEP or SIMPLE IRA is considered ongoing if the employer made a contribution (including a salary reduction contribution to a SAR-SEP or SIMPLE IRA) for the year in which the QDC would be made. If you make a tax deductible IRA contribution after age 70 ½, the amount you can exclude from your taxable income as a QCD generally will be reduced. Work with your Tax Advisor to ensure that you satisfy all the QCD requirements and that QCDs have been correctly reported on your tax return.

3 Congressional Research Service, Tax Issues Relating to Charitable Contributions and Organizations, January 8, 2026, https://www.congress.gov/crs_external_products/R/PDF/R48789/R48789.2.pdf

Disclosures:

This material has been prepared for informational purposes only. It does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Morgan Stanley Smith Barney LLC (“Morgan Stanley”) recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Morgan Stanley Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

This material may provide the addresses of, or contain hyperlinks to, third party websites. Except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm has not reviewed the linked site. Equally, except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm takes no responsibility for, and makes no representations or warranties whatsoever as to, the data and information contained therein. Such address or hyperlink (including addresses or hyperlinks to website material of Morgan Stanley Wealth Management) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through the material or the website of the firm shall be at your own risk and we shall have no liability arising out of, or in connection with, any such referenced website.

The Morgan Stanley Global Impact Funding Trust, Inc. (“MS GIFT, Inc.”) is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. MS Global Impact Funding Trust (“MS GIFT”) is a donor-advised fund. Morgan Stanley Smith Barney LLC provides investment management and administrative services to MS GIFT.

While we believe that MS GIFT provides a valuable philanthropic opportunity, contributions to MS GIFT are not appropriate for everyone. Other forms of charitable giving may be more appropriate depending on a donor’s specific situation. Of critical importance to any person considering making a donation to MS GIFT is the fact that any such donation is an irrevocable contribution. Although donors will have certain rights to make recommendations to MS GIFT as described in the Donor Circular & Disclosure Statement, contributions become the legal property of MS GIFT when donated.

The Donor Circular & Disclosure Statement describes the risks, fees and expenses associated with establishing and maintaining an MS GIFT account. Read it carefully before contributing.

If an account owner or the beneficiary resides in or pays income taxes to a state that offers its own 529 college savings or pre-paid tuition plan (an “In-State Plan”), that state may offer state or local tax benefits. These tax benefits may include deductible contributions, deferral of taxes on earnings and/or tax-free withdrawals. In addition, some states waive or discount fees or offer other benefits for state residents or taxpayers who participate in the In-State Plan. An account owner may be denied any or all state or local tax benefits or expense reductions by investing in another state’s plan (an “Out-of-State Plan”). In addition, an account owner’s state or locality may seek to recover the value of tax benefits (by assessing taxes and/or penalties) should an account owner rollover assets from an In-State Plan to an Out-of-State Plan. While state and local tax consequences or transfer and plan expenses are not the only factors to consider when investing in a 529 Plan, they are important to an account owner’s investment return and should be taken into account when selecting a 529 plan.

Tax laws are complex and are subject to change. This information is based upon current tax rules in effect at the time this was written. Morgan Stanley Smith Barney LLC and its Financial Advisors do not provide tax and legal advice. Individuals should always check with their tax and legal advisor before engaging in any transaction involving 529 Plans, Education Savings Accounts and other tax-advantaged investments or strategies.

Investments in a 529 Plan are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so an individual may lose money. Investors should review a Program Disclosure Statement, which contains more information on investment options, risks factors, fees and expenses and possible tax consequences. Investors should read the Program Disclosure Statement carefully before investing.

The 529 Plan Program Disclosure contains more information on investment options, risk factors, fees and expenses, and potential tax consequences. Investors can obtain a 529 Plan Program Disclosure from their Financial Advisor and should read it carefully before investing.

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