2025 Charitable Contribution Changes: What You Need to Know Before Year-End

The One Big Beautiful Bill Act (OBBBA) introduced several major updates that make charitable giving more rewarding for taxpayers in 2025 and beyond. Whether you itemize or take the standard deduction, these changes may help you increase your tax savings while supporting the causes you care about.

Below is a simple, easy-to-read breakdown of the key updates.

✨ New: $1,000 Charitable Deduction for Standard Deduction Filers

For 2025 and future years, all taxpayers—even those who do not itemize—can deduct charitable donations:

• $1,000 for single filers

• $2,000 for married filing jointly

Recordkeeping reminders:

• Gifts under $250 require a bank or credit card statement.

• Gifts of $250+ require a written acknowledgment from the charity.

This deduction is permanent and does not sunset.

📈 High-Income Earners: Upcoming 2026 Deduction Limits

Starting in 2026, married couples with taxable income over $768,701 will face a new cap:Itemized deductions cannot exceed 35% of their income.

If you're close to or within this bracket, consider accelerating charitable contributions into 2025 to capture the full deduction before the limit begins.

📦 Bunching Donations May Increase Your Tax Savings

Another major change arrives in 2026: charitable contributions will only be deductible if they exceed 0.5% of your AGI.

To maximize your tax savings under this rule, many taxpayers may want to “bunch” donations. This means making two years of gifts in a single year—for example:

• Give your normal December 2025 donation in January 2026

• OR shift your usual January donation into December

This strategy helps you exceed the new 0.5% AGI floor and maximize the deduction in the year it counts.

💼 Donor-Advised Funds: Donate Now, Give Later

A Donor-Advised Fund (DAF) can be a powerful planning tool. With a DAF, you can:

• Donate cash or appreciated stock now

• Take the immediate tax deduction

• Allow the funds to grow tax-free

• Recommend gifts to charities over time

DAFs offer flexibility, investment growth, and simplified long-term giving.Note: Contributions to DAFs do not count toward the new $1,000 standard-deduction charitable benefit.

🎉 Special Benefit for Taxpayers Age 70½ and Older

If you’re age 70.5 or older, you can donate up to $108,000 annually from your IRA directly to charity through a Qualified Charitable Distribution (QCD).

Benefits of QCDs:

• Reduces taxable income

• Can satisfy Required Minimum Distributions (RMDs)

• Is not limited by standard or itemized deduction rules

This is one of the most tax-efficient ways for retirees to support charities.

🏡 Estate Planning Opportunity: Reduce Your Taxable Estate

With the new estate and gift tax exemption set at:

• $15 million per individual

• $30 million per couple

high-net-worth households may benefit from contributing to DAFs or making other large charitable gifts now. This can reduce taxable estates while also providing an immediate income tax benefit.

🎓 Coming Soon: Deduction for Donations to Fund Scholarships

Starting in tax year 2027, all taxpayers—regardless of whether they itemize—can receive a credit for donations to

organizations granting private or religious school K-12 scholarships:

• $1,700 for single filers

• $3,400 for married filing jointly

This credit is separate from other charitable deductions and not subject to the usual deduction limits, offering another opportunity to support education while reducing your taxes.

💡 Final Thoughts: Give Generously, Plan Strategically

Charitable giving remains a powerful part of tax planning. With these updates taking effect in 2025 and beyond, strategic timing of your donations can help you:

• Increase your tax deductions

• Meet new deduction thresholds

• Maximize long-term giving strategies

If you’d like help building a personalized charitable giving plan or evaluating whether a Donor-Advised Fund, QCD, or future scholarship donation is right for you, we’re here to help.