In 2026, a grandmother makes the following payments for her granddaughter: $25,000 directly to a university for tuition; $5,000 for books and supplies; $10,000 directly to a hospital for medical treatment. How much of these payments qualifies as an unlimited exclusion payment (qualified transfer) for gift and GST tax purposes?

• A. $40,000
• B. $30,000
• C. $35,000
• D. $25,000

Answer: (C)

Direct payments for another person’s tuition or medical expenses are not treated as gifts; they’re considered unlimited exclusions (qualified transfers) for gift and GST tax purposes. The $25,000 paid directly to the university qualifies because it’s directly for tuition. The $10,000 paid directly to the hospital also qualifies because it’s a direct medical expense. The $5,000 for books and supplies does not qualify, since the exclusion applies to tuition, not books. Adding the two qualifying amounts gives $35,000 of unlimited-exclusion payments.