By most accounts, 2025 was a terrible year. If you are one of the few who had a good year, congratulations, and I envy you.
Personally, I can’t wait for 2025 to exit the building. But as always, there are year-end tax issues to consider, especially in a year that saw significant federal legislation passed.
In this season of giving, one item you should be aware of is the difference between charitable giving in 2025 versus 2026. The One Big Beautiful Bill Act included some changes to the deductibility of charitable gifts that will be effective Jan. 1. For the most part, if you itemize deductions, these changes mean you should be considering donations in these final days of 2025.
Charitable deductions for non-itemizers
If you do not itemize deductions on your tax return, it may not make a difference in which year you make a charitable donation. But you may be happy to know that the standard deduction will increase to $15,750 for individual filers, and $31,500 for married filers.
It’s also worth noting that for 2026-2029, the state and local tax (SALT) allowable deduction was increased to $40,000 from $10,000, so even if you didn’t itemize last year, it may behoove you to itemize in 2026.
Taxpayers who take the standard deduction are generally not able to deduct their charitable donations on their tax returns. However, OBBBA created a permanent above-the-line deduction for charitable donations of $1,000 per filer who takes the standard deduction beginning in 2026.
Accordingly, if you take the standard deduction and you’re deciding on donating up to $1,000 to charity in 2025 or 2026, from a strictly tax standpoint, you may want to wait until 2026.
Charitable deductions for itemizers
While many pundits expressed views that OBBBA was a gift to the wealthy, when it comes to charitable deductions, that may not be true. (Whether the act also harms charities is a discussion for another day.)
Beginning in 2026, the first 0.5% of a taxpayer’s adjusted gross income given to a charity will not be deductible. In other words, you have to give away 0.5% of your AGI with no deduction before you can take any charitable deduction. 2025 has no such threshold.
For taxpayers in the 37% bracket, you should also note that in 2026, your charitable deductions will only offset tax at a 35% rate. This is true of other itemized deductions as well.
In both 2025 and 2026, as well as years in the future, there is a 60% of AGI for cash gifts to public charities.
For wealthier donors, when it comes to large donations to charities, it likely makes sense to donate in 2025.
Strategies for charitable gifts
If you make large charitable donations, you will likely want to make those in 2025. There are options for taking advantage of the 2025 rules, even for donations to charities in future years, and for avoiding the limits in 2026 and beyond.
Donor advised funds
Consider a Donor Advised Fund either with your financial institution or your local community foundation.
With a DAF, you can make a contribution in 2025 and receive a charitable deduction under 2025 rules, while the funds can be distributed by the DAF in future years to your charities of choice. In other words, you can bundle multiple years of giving into 2025 and take the full deduction currently under the more favorable rules.
IRA qualified charitable distributions
Another way to avoid the 2026 limitations even after 2025 is to take advantage of the Qualified Charitable Distribution rules by giving to one or more charities directly from your IRA.
If you are age 70 ½ or older, you may transfer up to $108,000 annually from an IRA to a charity; for a married couple, that’s $216,000. This will count toward your required minimum distribution and will not be included in your gross income.
Since it’s not included in your gross income, the QCD amount will not increase your effective tax rate, your Social Security tax obligation or your Medicare premiums.
Note: You cannot make a QCD to a donor advised fund, a private foundation or a supporting organization. QCDs must be made by the IRA Trustee directly to qualified public charities.
Bunching donations
If you regularly support certain charities, for years after 2025, you may want to consider bunching donations into one year so that you only have to meet the 0.5% floor once.
For example, if you have $200,000 of AGI, and you donate $10,000 in 2026, the first $1,000 is not deductible (0.5% of $200,000); your deduction is limited to $9,000.
If you did the same thing in 2026, you’d again be limited to $9,000.
Over two years, you’d have a combined deduction of $18,000. If instead, you contribute $20,000 in 2026, the first $1,000 is not deductible, but the remaining $19,000 is. Then you skip the donation in 2027, and make a double donation in 2028, and so on. The benefit only increases with larger donations.
‘Tis the season of giving, but that doesn’t mean you can’t be tax savvy about your giving. And who knows, maybe thinking about helping others at year-end is a way to end 2025 on a high note. Here’s to a happy, new, improved year!
Teresa J. Rhyne is an attorney practicing estate planning and trust administration in Riverside and Paso Robles, CA. She is also the #1 New York Times bestselling author of “The Dog Lived (and So Will I).” You can reach her at Teresa@trlawgroup.net
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