If you’ve been saving for retirement in a traditional IRA, you may have heard about the option to convert it into a Roth IRA. It’s
Big Beautiful Charitable Giving Recommendations for Year End
Published Date : October 30, 2025
With two months remaining in 2025 and a new tax bill recently passed with provisions that will affect charitable giving strategies, now is a great time to think about your philanthropic plans before year end. This article will focus on larger gifts and tax-related provisions that affect public charities, community foundations, and donor-advised funds.
The One Big Beautiful Bill Act (OBBBA) includes some relevant changes in the tax treatment of charitable gifts, effective January 1, 2026:
- Taxpayers who itemize deductions will only be able to deduct the amount of charitable contributions that exceed 0.5% of adjusted gross income (AGI). For example, if your AGI is $100,000 and you donate $1,000, only $500 will be deductible. The first $500 or 0.5% won’t count. If your AGI is $1,000,000, the first $5,000 of gifts won’t be deductible.
- OBBBA caps the tax benefit of total itemized deductions for taxpayers in the 37% tax bracket. This cap effectively limits the benefit of itemized deductions to a maximum 35% tax rate. The 37% bracket amount for 2025 starts at taxable income of $626,351 for single and head of household filers or $751,601 for married taxpayers filing jointly.
- OBBBA changes the order of deductibility for different types of gifts, which is currently: 60% of AGI for cash, 50% for non-cash property, and 30% for capital gain property. The new order is lower AGI limit gifts are counted first and cash last.
- Also worth mentioning here is the state and local tax (SALT) deduction cap has been increased from $10,000 to $40,000 for most filers, which may encourage itemizing deductions over taking the standard deduction, and thus affect charitable giving plans. There is an income phaseout for those with modified adjusted gross income (MAGI) between $500,000 and $600,000. Those with MAGI over $600,000 continue to have a $10,000 SALT cap. In 2030, the deduction reverts to $10,000 for all filers.
2025 Strategies
As the old saying goes, “Make hay while the sun shines,” and consider making some larger gifts before the more favorable rules for charitable giving sunset and the new tax rules take effect.
If you plan on making charitable donations over the next several years, consider making a larger one-time contribution to your donor-advised fund (DAF) in 2025 so that you can benefit from the larger deduction. The same logic applies in future years: consider bunching several years’ worth of gifts into a single year, especially if you have a high-income year, to maximize your deduction.
For taxpayers over 70 ½, transfers directly from an IRA to charity, known as qualified charitable distributions (QCDs), continue to be a powerful way to give as they satisfy the required minimum distribution and are excluded from AGI. The maximum one can distribute from an IRA directly to a charity in 2025 is $108,000. This will increase to $115,000 per person in 2026.
Given the complexity of these calculations and increased precision needed in future years, we recommend you consult with your Sand Hill Wealth Manager and accountant before making any additional charitable donations.
Sources: One Big Beautiful Bill Act (OBBBA), Chevy Chase Trust, Carlile Patchen & Murphy, Kitces.com
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