Charitable Giving Strategies for 2025 and Beyond

November 24, 2025 - Looking to give smarter in 2025? Learn how new tax rules—including senior deductions, contribution thresholds, donor-advised fund strategies, and QCDs—can help you maximize your charitable impact while minimizing taxes. For a related primer, see our article How the Government Can Subsidize Your Charitable Giving.

Charitable giving is about more than taxes—it’s about values, legacy, and impact. Smart planning can stretch your generosity further. Since 2018, it has been important for families who are charitably inclined to explore if there are more tax efficient ways to give than just giving cash. In many cases, families are leaving significant tax savings on the table. With the One Big Beautiful Bill Act (OBBBA) updating key tax rules, now can be a good time to revisit how, when, and why you give.  

Below, we walk through the latest rules, strategies, and illustrative examples to help you give more strategically in 2025 and plan for 2026 and beyond.

Charitable Giving Strategies That Still Work:

1. Bunching Charitable Contributions

Bunching deductions is a simple way to stagger the years one gives to charity to get over the standard deduction, which allows a taxpayer to get deductions for free. Even with higher standard deductions, many donors’ other itemized deductions do not exceed the standard amount. Bunching allows concentration of gifts into high-deduction years, making itemizing worthwhile.

Example:
Joe is single and gives $10,000/year. His other deductions total $8,000.

• Non-bunch year: $8,000 + $10,000 = $18,000 → barely exceeds 2025 standard deduction $15,750.

• Bunching Year 1: Gives $20,000 (his normal $10,000 + $10,000 for Year 2). Itemized deductions = $28,000 → he itemizes.

• Year 2: Standard deduction $15,750.
  
  Impact over two years:

• Bunched: $28,000 + $15,750 = $43,750

• No bunching: $15,750 × 2 = $31,500

Note: Post-2025, the 0.5% floor means small gifts might not exceed the threshold, making bunching especially important for modest-income donors.

2. Donor-Advised Funds (DAFs)

A donor advised fund is an organization that acts as an intermediary between the donor and the charity and allows the donor to separate the timing of the deduction from the timing of the gift.    The DAF is a charity itself, but holds and invests the funds until the donor instructs it to give to a charity. DAFs allow large contributions in a favorable year, claim an immediate deduction, and distribute grants later. This gives flexibility and greater tax benefits.

Example with Tax Impact:
Jane and John, married, usually give $20,000/year. In 2025, Jane receives a $100,000 bonus.

• Contribute $120,000 (bonus + regular giving) to a DAF.

• Itemized deductions 2025: $120,000 + other deductions (e.g., $30,000) = $150,000. Standard deduction = $31,500 → net increase = $118,500.

• Federal tax savings: At 24% marginal rate → $118,500 × 24% ≈ $28,440 saved.

In subsequent years, they direct $20,000/year to charities from the DAF, providing flexibility without additional tax impact, while taking the full standard deduction each of these years.

2026+ consideration: The 0.5% floor and 35% deduction cap may reduce benefits for very large contributions, so front-loading gifts in 2025 is strategic.

3. Qualified Charitable Distributions (QCDs)

For those over 70½, QCDs allow direct IRA transfers to charities (up to $105,000/year in 2025), excluded from taxable income. QCDs bypass itemization, the 0.5% floor, and deduction caps. For many people who qualify, this can be the most tax efficient way to give because it reduces future income of the owner and potentially the owner’s heirs.

Example:
Jenna, 74, has a $20,000 RMD.

• She directs $20,000 from her IRA as a QCD, which covers her full required distribution (RMD)  for the year.

• The $20,000 is excluded from her adjusted gross income (AGI), reducing her income for purposes of Social Security taxation, Medicare premiums, and MAGI-based phase-outs like the new senior deduction.

• Standard deduction $15,750 still applies, yielding maximum tax-efficient charitable benefit.

4. Donating Appreciated Securities

Donating long-term appreciated stock avoids capital gains while giving a deduction equal to fair market value (if itemizing).

Example:
James, single, holds $50,000 of stock purchased for $400.

• Selling: $9,920 long-term capital gains tax.

• Donating directly: charity sells tax-free; James claims $50,000 deduction.

• He can reinvest cash he would otherwise donate.

Giving appreciated securities remains a powerful giving strategy because it avoids capital gains and can provide a sizable deduction.

5. Timing & Transition Strategies

Why timing matters in 2025:

• Many stricter rules (0.5% floor, deduction cap) begin in 2026.

• Accelerating gifts in 2025 allows donors to claim full deductions before limitations apply.

• Conversely, modest donors may defer to 2026 to leverage the new above-the-line $1,000/$2,000 deduction if not itemizing.

• Coordinate income events (bonuses, capital gains, Roth conversions) with giving to optimize AGI relative to charitable thresholds.

Example:
A donor anticipating a $50,000 bonus in 2026 could contribute it in late 2025 to avoid the 0.5% floor and 35% cap, maximizing the tax deduction.

Final Thoughts & Practical Tips

• 2025 is a strategic window: Pre-floor, pre-cap rules make it ideal for front-loading gifts.

• Use multiple tools: Bunching, DAFs, QCDs, and securities together provide flexibility across income levels and life stages.

• Monitor AGI thresholds: Senior bonus deductions and deduction phase-outs depend on income.

• Coordinate with tax planning: Charitable strategy interacts with Roth conversions, capital gains, estate planning, and retirement distributions.

• Consult advisors: Every taxpayer’s situation is unique; work with a CPA or planner before executing large moves.

• What’s new under OBBBA (key changes that matter to donors)?

  OBBBA introduced several updates. Some apply immediately (2025), and others in 2026.

  Change: Standard deduction increases
  Effective Year: 2025 & 2026
  Impact / Notes: 2025 — Single $15,750, MFJ $31,500, HOH $23,625.
  2026 — Single $16,100, MFJ $32,200, HOH $24,150.

  Change: “Senior bonus” deduction
  Effective Year: 2025–2028
  Impact / Notes: Age 65+ may claim an extra $6,000. Phases out above MAGI $75,000 (single) / $150,000 (MFJ).

  Change: Above-the-line deduction (non-itemizers)
  Effective Year: 2026+
  Impact / Notes: Standard-deduction filers can deduct up to $1,000 (single) / $2,000 (MFJ) for cash gifts. Does not include DAFs or private foundations.

  Change: 0.5% floor on itemized deductions
  Effective Year: 2026+
  Impact / Notes: Only charitable gifts exceeding 0.5% of AGI are deductible. Amounts below the threshold may carry forward.

  Change: Cap on deduction benefit for top-bracket donors
  Effective Year: 2026+
  Impact / Notes: Tax benefit capped at 35% per dollar, even if the marginal rate is higher.

  Change: SALT deduction increase
  Effective Year: 2025–2029
  Impact / Notes: SALT limit temporarily raised from $10,000 to $40,000 for eligible taxpayers.

  Change: Corporate 1% floor
  Effective Year: 2026+
  Impact / Notes: C corporations must exceed 1% of taxable income to deduct charitable contributions; excess above 10% may carry forward for 5 years.

  Transitional note: Many stricter rules—0.5% floor, deduction cap, corporate floor—do not apply in 2025, making this a strategic year for charitable planning.

• How do Qualified Charitable Distributions (QCDs) help with RMDs?

  QCDs allow IRA dollars to go directly to charity and may satisfy part or all of a Required Minimum Distribution. Because QCDs are excluded from AGI, they don’t rely on itemizing and may also affect Medicare premiums and Social Security taxation.

• Is bunching still useful with a higher standard deduction?

  Many donors compare two- or three-year totals. By bunching contributions into one year (and itemizing that year) while taking the standard deduction in the next year(s), some households find total deductions may be higher over the period.

• Can I use a donor-advised fund (DAF) to time my deduction?

  A DAF can allow an immediate deduction in the year of contribution while grants to charities are made over time. Some families use this in high-income or liquidity years to align giving with cash flow and tax timing.

• Do appreciated stock gifts still make sense?

  Donating long-term appreciated securities directly to a public charity or DAF avoids realizing capital gains and, if itemizing, may allow a deduction at fair market value (subject to applicable limits).

• What is the 0.5% AGI floor that begins in 2026?

  Beginning in 2026, itemized charitable deductions count only to the extent they exceed 0.5% of AGI. Amounts below that threshold may be carried forward under standard carryforward rules.

• Does the new above-the-line charitable deduction (2026+) apply to DAFs?

  No. As described above, the non-itemizer deduction applies to cash gifts to public charities and does not apply to donor-advised funds or private foundations.

• How might the “senior bonus” deduction interact with giving?

  For those age 65+, an additional deduction (subject to MAGI phase-outs) may apply. Lower AGI from approaches like QCDs can interact with other thresholds, so coordination with a tax professional is commonly helpful.

• Could the higher SALT cap (2025–2029) affect whether I itemize?

  Potentially. If state and local tax deductions, plus other itemized deductions and charitable gifts, exceed the standard deduction, some households may itemize in those years, which can change the giving calculus.

• Is there a preferred time of year to give?

  The calendar timing varies by household. Some donors align gifts with income events, grant cycles, or portfolio rebalancing. Others prefer consistent monthly/quarterly giving for budgeting.

• What records do I need to substantiate charitable deductions?

  Generally: contemporaneous written acknowledgments for gifts of $250 or more, bank records or receipts for cash gifts, and additional documentation (including qualified appraisals) for certain non-cash gifts.

• Disclosures

  Information presented is for educational purposes only and is not personalized investment, financial, legal, tax, or accounting advice. Nothing on this website should be interpreted to state or imply that past performance is an indication of future performance. All investments involve risk and unless otherwise stated are not guaranteed. Be sure to consult with tax, legal, accounting, and financial professionals about your specific situation before implementing any planning strategies. Investment Advisory Services offered through Timberchase Financial, LLC, a Registered Investment Adviser with the U.S. Securities & Exchange Commission. Registration does not imply a certain level of skill or training.