Donating to charity isn’t just an act of kindness — it’s one of the few ways to control how much you, actively, send to the IRS. If you make the right donation at the right time, you can reduce your taxable income, support a cause you believe in, and create a sense of purpose that is hard to quantify.
Timing matters, though. Due to major tax law changes taking effect in 2026, 2025 may be your last chance to take advantage of the older, more generous deduction rules. If you wait too long, you could lose out on valuable tax breaks.
We’ll walk you through the changes, how to plan, and the best ways to give this year. This will ensure your generosity has the most significant impact — for you and for the charity you support.
Know the Rules Before You Give
Generally, cash gifts to qualified charities can be deducted from your adjusted gross income (AGI) up to 60%. A 501(c)(3) organization, such as a religious group, educational institution, or charitable organization, falls into this category.
It’s even better if you donate appreciated assets, such as stocks or real estate, that you’ve owned for over a year. By deducting the fair market value, you’ll avoid capital gains tax if you were to sell the asset yourself.
That’s a powerful one-two punch. Not only do you get a deduction, but you also avoid another tax.
What’s changing in 2026?
In July 2025, Congress passed the “One Big Beautiful Bill” (OBBB Act), overhauling several parts of the tax code. As a result of these changes, charitable deductions will be affected beginning in 2026. Here’s what you need to know;
- A new “floor” for deductions. The amount you can deduct from your AGI will be limited to 0.5%. Smaller donations may no longer qualify.
- Deduction value cap. If you’re in a higher tax bracket, you can only deduct 35% of your income.
- For cash gifts, there’s a permanent 60% AGI limit. That’s good news. Why? The higher ceiling introduced by prior temporary laws is now permanently in place.
- Non-itemizers can now deduct above-the-line. For cash donations to qualified public charities, even if you take the standard deduction, you can deduct up to $1,000 (single) or $2,000 (married filing jointly) starting in 2026.
- DAFs and private foundations are excluded. The new above-the-line deduction won’t apply to donations to donor-advised funds (DAFs) or private foundations.
To put it simply, 2025 is the last year to take advantage of today’s lower, higher-value deduction rules.
Smart Giving Moves for 2025
Fortunately, there is still time to plan. By employing a few smart strategies, you can stretch your charitable dollars further this year and set yourself up for success once the new laws are enacted.
Give sooner, not later.
You might want to front-load your giving into 2025 if you plan to make a donation in 2026 or beyond. Higher-income earners can benefit from shifting one or two planned donations into this year to maximize their deduction.
If you expect a high income in 2025, for instance, after a bonus, business sale, or significant investment gain, this approach is beneficial.
Try “bunching” your donations.
In a bunching strategy, multiple years’ worth of charitable contributions are combined into one tax year. The year you “bunch,” you itemize your deductions to get a larger write-off. In subsequent “off” years, you may benefit more from the standard deduction than from itemizing a lower annual amount.
In 2025, for example, giving $15,000 could push you over the 0.5% AGI floor and enable you to take a much larger deduction. As a result, you will not have to itemize in 2026 and 2027.
Donate appreciated assets.
When it comes to charitable giving, cash isn’t always king. Stocks, bonds, and real estate you hold that have appreciated in value can be donated directly to the charity.
As a result, you’ll receive a deduction for their fair market value and avoid paying capital gains taxes. A charity can then sell the asset tax-free, putting its full value to use.
Use Donor-Advised Funds (DAFs).
A DAF allows you to make a charitable contribution now, deduct it this year, and decide later which charities to support.
Due to their flexibility, DAFs can be a very effective tool for front-loading donations. Those who want time to decide where to make donations can fund the account in 2025 (locking in the deduction) and distribute grants over several years.
Give from your IRA (QCDs).
In 2025, IRA owners who are 70 ½ or older can donate up to $108,000 directly to qualified charities through a Qualified Charitable Distribution (QCD).
QCDs count toward your Required Minimum Distribution (RMD), but they do not increase your taxable income. In other words, you can meet your withdrawal requirement and support a cause without triggering a tax bill.
Real-World Scenarios
To illustrate how these strategies work, let’s take a look at a few simplified examples;
Example 1: High-income earner, plans to itemize.
- AGI. $400,000
- Planned giving. $30,000
Since this donor’s AGI is below 60%, he can likely deduct the full amount. Nevertheless, 2026’s rules would limit the deduction to 0.5% of AGI ($2,000) and cap it at 35%.
The result? Giving in 2025 yields a much larger tax benefit.
Example 2: Moderate income, doesn’t usually itemize.
- AGI: $80,000
- Giving: $1,200
Without itemizing, you won’t get a deduction in 2025, but you can claim up to $1,000 as an above-the-line deduction in 2026. If you’re a smaller donor, you might actually be better off waiting until the new rule comes into effect.
Example 3: Retiree with IRA & RMDs.
- Age: 72
- RMD: $25,000
As a QCD, you can direct $25,000 from your IRA to a qualified charity and exclude that income from your taxable income. For retirees, it’s one of the most effective tools for giving.
Avoid the Paperwork Pitfalls
Even well-planned donations can lose tax value if the paperwork isn’t correct. It’s important to keep the following straight;
- Verify the charity. If you want to confirm 501(c)(3) status, you can use the IRS’s Tax-Exempt Organization Search tool online.
- Keep receipts. If you give $250 or more, you must receive written confirmation from the charity that you received goods or services in return.
- Get appraisals for big non-cash gifts. Whenever you donate stock or property worth more than $5,000, you’ll need a qualified appraisal.
- Mind carryover rules. Typically, if your charitable deduction exceeds your AGI limit, you can carry it forward for five years.
- Coordinate deductions. If you itemize or take the standard deduction, your giving might be affected by other deductions — like state and local taxes or mortgage interest.
- Watch out for scams. Don’t trust entities that promise immediate tax write-offs but have leeway or vague missions. There are lots of scams out there. Always prioritize transparency, mission clarity, and IRS standing.
A Simple Giving Timeline for 2025
The following tips can help you plan your charitable giving throughout the year so that you don’t end up scrambling in December.
- Early 2025. Calculate your income and tax bracket. Decide how much to front-load based on your giving goals.
- Spring. You should make sure your projected donations exceed the 0.5% AGI floor if you’re itemizing. If necessary, begin transferring appreciated assets.
- Summer. Don’t forget to review your investments and consider creating a donor-advised fund.
- Fall. Finalize your plans for bunching or QCD for your big donations.
- December. Before the end of the year, double-check receipts, written acknowledgements, and charity verifications.
When you organize now, you can avoid a lot of headaches (and potentially thousands of dollars) in the future.
Common Misconceptions & Myths
Donors can miss opportunities or incur financial inefficiencies due to misconceptions about charitable giving. We can prevent this by debunking the following myths and misconceptions.
“I don’t itemize, so giving doesn’t help me.”
For 2025, that was true, but not for long. The amount you can deduct without itemizing will increase to $1,000 ($2,000 for couples) in 2026.
“I’ll sell appreciated stock and donate the cash.”
This is a costly mistake. By donating the stock directly, you can avoid capital gains tax and still claim the deduction.
“The rules never really change.”
Tax laws are constantly evolving. With the 2026 update, many households will be able to take advantage of new floors, caps, and thresholds that will change the way deductions are calculated.
“Charitable giving is only about the tax break.”
The tax benefit is the icing — not the actual cake. In the end, the real reward comes from supporting causes that matter to you in a smarter, more strategic manner.
Putting it All Together
If you’ve been thinking about giving, now is the time. As of this year, the rules for deductions are tighter, and new limits are in effect.
With front-loading donations, donor-advised funds, gifting appreciated assets, and leveraging QCDs from your IRA, you can make your donations go farther and lower your taxes.
Without execution, strategy is just an idea, so here’s what we need to do by December 31;
- Consult your tax advisor to test giving levels, income scenarios, and deduction scenarios.
- Based on your profile, choose your tactics, such as bunching, QCD, asset gifts, and DAF.
- Don’t wait until December to make large gifts. The later you wait, the harder it will be to execute them correctly.
- Keep records, including acknowledgments, appraisals, and charity verification.
- Make this planning a regular part of your checklist each year: your financial, tax, and giving landscape changes.
Giving to charity shouldn’t be a last-minute decision. If you plan ahead, you can turn 2025 into a year of both financial efficiency and meaningful impact.
Image Credit: Antoni Shkraba Studio; Pexels
