Charitable giving this year
Last Updated: December 2, 2025
The One Big Beautiful Bill Act enacted last summer made several important tweaks to the tax rules for charitable deductions to keep in mind as we come to the end of the year.
Those who use the standard deduction are now entitled to an “above the line” deduction for up to $1,000 of cash gifts to charity ($2,000 for couples filing jointly). Some 90% or so of taxpayers have been using the standard deduction in recent years, and therefore have had no federal tax benefit from their charitable giving—that has now changed. Whether the new tax treatment will have a material effect on charitable giving remains to be seen.
Those who itemize now have a floor of 0.5% of adjusted gross income (AGI) on their deduction for gifts to charity. Example: If adjusted gross income is $100,000, the floor is $500. Charitable gifts generate an itemized deduction only to the extent they exceed that $500 floor. A $2,000 gift creates a $1,500 deduction, or a $5,000 gift a $4,500 deduction.
Finally, for major philanthropic moves, the deduction cap of 60% of AGI has been made permanent. Gifts in excess of the cap may be carried forward to future tax years.
Strategic bunching of charitable giving should be considered, toggling between itemizing one year and the standard deduction the next. This could maximize the tax benefit from gifts to charity. On the other hand, charities generally prefer to get gifts sooner rather than later. The tax benefit is usually an important but secondary consideration when planning charitable gifts. Don’t let the tail of tax effects wag the dog of the charitable impulse.
One crucial area that remains unchanged by the recent tax legislation is the Qualified Charitable Distribution (QCD) from an IRA. Up to $108,000 may be directed from an IRA to a qualified charity by a taxpayer who is older than 70 ½. The QCD will not be added to AGI (so no deduction is needed), and therefore the QCD will not affect taxation of Social Security benefits or future Medicare premiums. A married couple may each have a QCD, but only if they have separate IRAs from which to distribute.
(November 2025)
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