Charitable Giving Advantages for 2025

This year presents a great opportunity to maximize tax savings and support the causes you care about. If you’ve ever considered increasing your charitable giving or using a donor-advised fund (DAF) to organize your philanthropy, 2025 is an unusually important year. Major tax law changes take effect on January 1, 2026, and the new rules are less generous.

Let’s break down what’s changing and how to make the most of it.

2025 is the final year of the “old” (more generous) charitable giving rules. You have just a few more weeks to take advantage of it. Most Americans rely on the standard deduction, lumping together mortgage interest, charitable donations, and medical expenses so they don’t have to itemize. However, if you itemize and exceed the standard deduction, you can deduct charitable gifts so that every dollar counts.  If you give cash to a public charity or DAF, you can generally deduct up to 60% of your income, and this limit is now permanent.

Starting in 2026, the new rules from the One Big Beautiful Bill Act (OBBBA) take effect. Here’s what they mean:

• A new 0.5% of adjusted gross income (AGI) “floor” for itemizers. You will only receive a deduction for charitable contributions that exceed 0.5% of your income. For example, if your AGI is $200,000, the first $1,000 you donate won’t qualify for a deduction.

• For those in the top tax bracket (37%), the value of your deduction will decrease to 35 cents per dollar donated, down from 37 cents before.

• Non-itemizers (those who take the standard deduction) can deduct up to $1,000 ($2,000 for joint filers) in cash gifts directly to charities, but this does not include gifts to donor-advised funds or private foundations.

• Carryforwards remain available for contributions exceeding annual limits; however, amounts carried over from 2025 and earlier won’t be subject to the new 2026 restrictions. The OBBBA, signed on July 4, 2025, imposes a 0.5% AGI floor limiting the carryforwards that can be used in future years.

Starting in 2026, it will become more difficult to qualify for the same charitable deduction on the same gift, especially for DAF contributions, which will lose value for non-itemizers.

Here’s the planning opportunity

If you plan to itemize in 2025 to maximize the tax benefit of your charitable gifts, you may need a larger donation to surpass the high standard deduction threshold this year. This is where a donor-advised fund (DAF) can be especially valuable. Your larger, “bunched” donations may help you maximize your deduction under the current, more generous rules.

A DAF lets you be tax-smart. Make one substantial charitable contribution in 2025, when the rules are more favorable, claiming the full deduction. Then, let the DAF distribute funds gradually at your own pace. You’re not accelerating your philanthropy; you’re just accelerating your tax deduction.

For many families, this “bunching” strategy is powerful. Consolidate several years’ worth of giving into 2025, claim the deduction when it’s most valuable, and let the DAF distribute grants over time. Some use this strategy every few years; for others, 2025 may be a one-time advantage.

If you are charitably inclined, 2025 may be your most valuable year for taking a deduction. The current rules are more favorable than those that take effect in 2026. It might require a willingness to make a larger gift this year to itemize deductions. If 2025 is a high-income year for you, the tax savings could be even greater.

If you are charitably inclined or considering a donor-advised fund, now is an excellent time to discuss strategy. Thoughtful planning can significantly enhance both your giving impact and the tax benefits you receive.