December 2025 – Charitable Contributions

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December 2025 – 2025 Charitable Contribution Opportunities & Upcoming 2026 Changes

 

OVERVIEW

As we approach year-end, now is an excellent time to review your charitable giving strategy for 2025. Thoughtful planning can help you to support the causes that matter most to you, but it can also maximize available tax benefits – particularly as several key provisions are scheduled to change beginning in 2026.

This newsletter will highlight planning opportunities available for 2025 and outline the shift in charitable contribution rules that are expected to start January 1, 2026.

KEY OPPORTUNITIES FOR CHARITABLE GIVING IN 2025:

Evaluate whether itemizing provides a benefit:

  • For 2025, the standard deduction is still relatively high. If your total itemized deductions, including charitable gifts, do not exceed the standard deduction, itemizing may not provide an additional tax benefit.
  • If you regularly donate to charity but fall short of the itemizing threshold, consider:
    • Grouping gifts: combine multiple years of donations into a single tax year
    • Using a Donor-Advised Fund (DAF) to pre-fund future charitable gifts

IRA Qualified Charitable Distributions (QCDs): For 2025, taxpayers 70 ½ and older can donate up to $108,000 directly from IRAs to qualified charities.

Benefits include:

  • Counts towards RMDs (if applicable)
  • Excluded from taxable income
  • Helps reduce AGI-based phaseouts

Consider Charitable Remainder Trusts (CRTs) & Other Planned Giving Strategies.

High-income years or large liquidity events may be ideal times to evaluate:

  • CRTs
  • Charitable lead trusts
  • Private foundations

WHAT IS CHANGING IN 2026?

Additional charitable deductions

  • For taxpayers taking the standard deduction, you can deduct an additional $1,000 for single or $2,000 for MFJ for charitable contributions.
  • These must be cash contributions and cannot be private foundations nor donor advised funds.
  • Planning tip – Use QCDs (qualified charitable distributions) for charitable contributions, plus standard deduction, plus additional charitable deduction.

Reduction to charitable for itemizers

  • Taxpayers who itemize must reduce charitable contributions by .5% of their AGI every year.
    • This essentially means that the first 0.5% of AGI given to charity in the year is essentially disallowed.
    • The disallowed amount will be carried forward up to 5 years.
  • 60% of adjusted gross income cash contribution limit has been made permanent.
  • Taxpayers in the highest tax bracket (37%) will have itemized deductions limited based on an income phase-out.
    • If you are in the highest tax bracket, we recommend considering making donations in 2025 by year-end before these limitations kick in.

OUR RECOMMENDATIONS

We recommend reviewing your charitable giving strategy before year-end, especially considering the upcoming 2026 changes. Consider:

  1. Whether to accelerate deductions into 2025 or defer until itemizing becomes more likely in 2026.
  2. Whether a DAF contribution in 2025 could preserve deductions while supporting future giving.
  3. Coordinating charitable planning with retirement (QCDs).
  4. Whether higher 2025 income makes an increased charitable gift beneficial this year.

Charitable giving is most effective when paired with a personalized tax strategy. If you would like assistance evaluating your 2025 options or developing a plan for 2026 and beyond, please reach out to us.