Charity Giving In 2025? Year-End Moves Can Cut Your Tax Bill

If you’re in a giving mood — and want to trim your taxes, too — there are moves you must make before Dec. 31 to get the biggest bang for the bucks you give to charity.

The “Big Beautiful Bill” passed in July introduces big changes to charitable giving rules. However, the major changes that impact tax deductions for gifts to charity don’t go into effect until 2026.

As a result, there’s a short window of opportunity to tweak giving strategies to maximize tax savings this year and next.

Maxing Out Donations And Charitable Giving

The big changes make deductions for charitable contributions available for the first time for taxpayers who don’t itemize deductions on their tax returns.

And for those that do itemize, deductions face a floor. That floor reduces the dollar amount of deductible gifts. High-income earners in the highest 37% tax bracket will also be limited to a tax deduction totaling 35%.

The impact of the rule changes will differ for taxpayers who itemize on their returns as well as those who take the standard deduction, or so-called non-itemizers.

Now’s a good time to fine-tune your charitable giving strategy just in time for Dec. 2 GivingTuesday. This is an annual global day of generosity designed to encourage giving back through donations, volunteering or other acts of kindness.

Changes In Charitable Giving For Non-Itemizers

The new rules expand tax-deduction opportunities for everyday donors who don’t itemize deductions on their federal tax return.

Under existing law, if you take the standard deduction on your return, you can’t claim a federal income tax deduction for charitable gifts. But a new provision in the One Big Beautiful Bill Act (OBBBA) changes that.

Starting in 2026, single filers who don’t itemize on their returns can deduct up to $1,000 for charitable cash gifts. And married couples filing jointly can deduct up to $2,000 of cash gifts. This so-called “above-the-line” deduction is in addition to next year’s standard deduction of $16,100 for single filers and $32,200 for joint filers. These deductions immediately reduce the amount of a taxpayer’s income that is subject to taxes.

For example, a married couple with $100,000 in expected income next year that takes the standard deduction and makes a $2,000 cash donation will see their taxable income immediately fall to $65,800.

Minding The Rules

This provision benefits the bulk of Americans, as only 10% of tax filers itemize on their tax returns.

“A universal charitable deduction is now available (starting in 2026),” said Sarah Montgomery, partner and leader of the philanthropic advisory practice at Plante Moran, a tax, consulting and wealth management firm. “That’s a big opportunity for most people.”

The tax-savings play is straightforward. If you’re a non-itemizer and were planning on giving to charity this year, it makes sense to postpone that giving until 2026 to take advantage of the new deduction.

For example, if you’re a married couple and regularly give $1,000 to your favorite charity each year, skipping your gift this year and doubling your gift to $2,000 next year will result in tax savings.

“If I was your tax advisor, I would say do it (wait to make a bigger donation) in 2026,” said Montgomery.

This new deduction for taxpayers who take the standard deduction only applies to cash gifts, not contributions to donor-advised funds (DAFs) or clothes donations or giving away appreciated assets.

Moves To Save Taxes On Charitable Gifts

Starting in 2026, charitable deductions for itemizers will be subject to a floor. Only the value of total gifts that exceed 0.5% of adjusted gross income (AGI) is allowed. For example, someone with AGI of $200,000 will only be able to deduct the portion of their charitable gifts above $1,000 (0.5% of $200,000).

“Under the (current) law, every dollar is counted,” said Justin Flach, managing director, wealth strategy at U.S. Bank. “But next year, you’ve got to clear a threshold before your charitable deductions count.”

So, what’s the play? Time your contributions in the year when you can best maximize tax savings. Since the deduction floor doesn’t kick in until next year, front-loading deductions for next year and maybe even the year after that into your 2025 giving plan can boost your deduction this year and sidestep the new 0.5% floor next year.

‘Bunch’ Your Donations

That’s where the strategy of “bunching” comes in. “Front load a couple of years of giving this year,” said Montgomery.

If you normally give $5,000 per year to charity, consider accelerating, or bunching, multiple years of charitable contributions in 2025. So instead of gifting $5,000 in 2025, $5,000 in 2026 and $5,000 in 2027, make a single $15,000 charitable donation this year.

Using the $200,000 AGI example, you would be able to deduct $14,000 of the $15,000 in 2025. In contrast, if you spread the gifts over three years, you would only be able to deduct $5,000 this year and $4,000 each next year and in 2027. That’s a total deduction of $13,000. The bunching strategy saves you $1,000 in taxes.

“Is it a huge amount?” said Montgomery. “No, but the (gift-giver) is going to get more bank for their buck.”

For itemizers in the highest income tax bracket, the value of their charitable deduction will be capped at 35% beginning in 2026. This change will reduce the tax benefit of charitable contributions for high earners in the 37% bracket, according to law firm WilmerHale.

The Value Of Donations

The new rule lowers the value of the deduction from 37 cents per dollar in 2025 to 35 cents per dollar in 2026. For example, a $10,000 charitable gift would generate a $3,500 federal tax benefit in 2026, compared to $3,700 today, the law firm notes.

The deduction cap makes executing a bunching strategy in 2025 even more attractive for taxpayers in the highest tax bracket, says Montgomery. The reason: They can maximize their deduction this year as well as avoid the higher cap before both the 0.5% general deduction floor and the 35% high-earner cap kicks in next year.

Using Funds For Donations

Some charitable gift-giving vehicles can offer even more flexibility and tax savings. A donor-advised fund (DAF) allows the taxpayer to immediately deduct the total amount of any gift. It also offers flexibility when the charities get the funds.

“The idea is (you) don’t lose a deduction in future years if you can capture it now,” said Flach.

For example, a $15,000 gift to a donor-advised fund will allow for the full $15,000 deduction in 2025. But there’s no timetable for when the gift funds need to be given away. This provides the gift-giver with the flexibility to bunch donations in 2025 but dole out money in equal installments over the next three years.

“You can take as long as you want to make those gifts from the DAF to the public charity,” said Flach. The contributions to DAFs also grow tax-free until they are distributed to the charities.

Donation Strategies

Donating appreciated assets, such as shares of high-flying Nvidia (NVDA) stock, can also save you big on taxes, adds Flach. Donating long-term appreciated assets (or those held for more than one year that get long-term capital gains tax treatment) offers a powerful one-two punch. Not only can you deduct the entire gift contribution in the year you give shares away, you also net savings by not having to pay a capital-gains tax on your profits.

“If you’ve been riding the market the last couple of year, it’s likely you have appreciated securities,” said Flach. “It’s very tax advantageous to make a gift of those securities versus cash.”

With the new year fast approaching, now’s the time to do some tax projections to see where you’re likely to fall this year and what your income looks like next year, says Tim Steffen, director of advanced planning at Baird.

What you want to determine is: “In terms of gift timing, when are charitable gifts going to produce the biggest tax benefit,” said Steffen.

Will it be this year? Or next year? The answer will determine your giving strategy.

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