2025 Charitable Giving Tax Guidelines

Year-end 2025 is a strategic time for charitable giving due to significant changes in tax law taking effect in 2026 under the One Big Beautiful Bill Act (OBBBA). Donors who itemize deductions may find increased tax benefits by accelerating their donations into 2025.

Key Tax Changes and Strategies for 2025

The rules for charitable deductions in 2025 remain the same as previous years, but several new limitations will apply starting in 2026, making 2025 the final year to donate under the current, more favorable rules.

Strategies to Consider Before Year-End 2025

• “Bunching” Contributions: Consolidate several years’ worth of donations into 2025 to exceed the standard deduction threshold for this year, then take the standard deduction in future years. This can maximize total tax savings over a two-year period.
• Utilize Donor-Advised Funds (DAFs): A DAF allows you to receive an immediate tax deduction in 2025 for a large contribution, while you can recommend grants to specific charities over time (even in 2026 and beyond).
• Donate Appreciated Securities: Gifting appreciated stocks, mutual funds, or other non-cash assets held for over a year allows you to potentially eliminate capital gains tax and claim a fair-market-value deduction. This strategy may offer greater advantages in 2025 before the new AGI floor kicks in for itemizers.
• Qualified Charitable Distributions (QCDs): If you are age 70½ or older, you can make tax-free donations (up to $108,000 in 2025) directly from your IRA to a qualified charity. This is particularly useful if you are taking the standard deduction or need to satisfy your Required Minimum Distribution (RMD).

You can make deductible contributions of cash, appreciated securities, and various other assets to a Donor-Advised Fund (DAF) in 2025, provided you itemize your deductions. The deduction limits depend on the type of asset donated. This is a strategic year for such donations, as new restrictions are set to take effect in 2026.

Deductible gifts to a DAF in 2025

• Cash: You can deduct cash gifts to a DAF up to 60% of your Adjusted Gross Income (AGI).
• Appreciated Securities: Donating appreciated assets, such as stocks or mutual fund shares held for more than one year, is highly tax-efficient. You can claim a deduction for the fair market value of the assets and avoid paying capital gains tax on the appreciation. For these gifts, the deduction limit is 30% of your AGI.
• Other Assets: It is also possible to contribute other assets, like private company stock, cryptocurrency, and life insurance, although these may have specific valuation requirements.

Important considerations for 2025 giving

• Itemizing is required: In 2025, you must itemize deductions to claim a tax benefit for your DAF contribution. Starting in 2026, a new above-the-line deduction for non-itemizers will be available, but gifts to DAFs will not qualify for it.
• AGI limits and carryovers: For itemizers, any contributions exceeding the AGI limits (60% for cash, 30% for appreciated non-cash assets) can be carried forward and deducted for up to five subsequent tax years.
• “Bunching” donations: With the increased standard deduction and new restrictions beginning in 2026, many itemizers are “bunching” several years’ worth of donations into 2025 by contributing to a DAF. This allows them to claim a large tax deduction this year while still granting funds to charities over time.
• Ineligible for QCDs: It is important to note that a DAF is not an eligible recipient of a Qualified Charitable Distribution (QCD) from an IRA.

For optimal tax planning, particularly with complex assets, it is best to consult with a financial or tax advisor.

For more information regarding United Way Miami giving options or other planned gifts, please contact Matt Fernandez at fernandezm@unitedwaymiami.org or 305-646-7286.