12/21/2025
Copied from today’s Minnesota Star Tribune.
 TIMING KEY IN CHARITY DONATIONS
Donors should first weigh new tax laws effective Jan. 1.
Story by ANN CARRNS Illustration by TILL LAUER The New York Times
Thinking about donating to your favorite charity before the new year? You may want to consider tax law changes arriving in 2026 before deciding whether to make your gift in December or wait until next year.
Changes this summer to the federal tax law, effective Jan. 1, mean that high earners who itemize deductions may see more of a benefit if they donate before the end of this year, tax experts say.
People who take the standard deduction, however, may be better off waiting until next year. "Timing matters a lot this year," said Amie K***z, chair of the individual and self-employed tax committee at the American Institute of CPAs.
Here's what to know, as the year-end deadline approaches for 2025 charitable contributions.
What if I itemize deductions and make charitable gifts?
For people who itemize — meaning they deduct multiple items when they file a tax return instead of taking the fixed, standard deduction — the new tax law makes two changes that shave the benefit from charitable contributions, starting next year.
The law set a new "floor" for deductions of charitable contributions of 0.5% of the filer's adjusted gross income, which means only amounts that exceed that level may be deducted. (Adjusted gross income, in tax lingo, is generally your income after subtracting certain "adjustments," like deposits into an individual retirement account.)
Someone with income of $250,000 in 2026, for instance, may deduct only the portion of the contribution that exceeds $1,250.
The same charitable contribution made in 2025, however, would include the first $1,250 in the allowable deduction.
There's also a new "cap" affecting high earners.
The law also set a lower cap on the value of deductible contributions made by high-earning donors.
For filers in the top tax bracket, with a 37% marginal rate, the value of charitable deductions is reduced for 2026 to tax savings of 35 cents per dollar instead of 37 cents per dollar, according to the Tax Foundation, a nonprofit research group. (The top bracket in 2026 will apply to individuals with income over $640,600, and to married couples filing jointly with income above $768,700.)
Michael Aloi, a wealth management adviser with Summit Financial in Stratford, Conn. , said high earners were affected by both of the changes, so donations in 2025 were more advantageous.
Here's an example from Fidelity Charitable, an independent public charity affiliated with Fidelity Investments that helps thousands of people manage philanthropic donations:
A taxpayer earning $1 million who wants to donate $30,000 can currently deduct the full amount from taxable income. At a 37% rate, the taxpayer could save $11,100 in taxes.
But starting in 2026, the taxpayer's maximum deductible amount will drop for two reasons — the new 0.5% floor and the lower 35% rate. So that taxpayer who makes a $30,000 contribution would save only $8,750 in taxes.
How can I optimize the tax benefit from my contributions?
One option if you itemize, Aloi said, is to make charitable gifts this year that you were planning to make over several years — a technique sometimes referred to as "bunching." "This year is a great year to bunch, if you can afford to do it," he said.
What if I'm not sure what charities I want to support?
If you haven't yet decided where you want to direct your contributions, you could consider making your gift using a "donor-advised" fund. Such funds allow you to get a tax deduction for the current tax year but have the money distributed as grants over time.
Donor-advised funds are offered by nonprofit affi liates of large investment companies and by community foundations.
Contributors can give cash or other assets, like appreciated stock, to the funds. The fund typically sells the stock upon donation. Donors can then choose how the funds are invested, until they are ready to confirm a distribution.
It's especially advantageous to contribute stock that has appreciated in value to a donor-advised fund, said Brandon O'Neill, a vice president and planning consultant at Fidelity Charitable, which manages more than 200,000 donor-advised accounts. Doing so allows donors to avoid paying capital gains taxes on the sale of the stock, leaving more of the gift available to the charity. "It really is powerful," he said.
There's no official deadline to give away the money in a donor-advised fund, but some programs may require periodic grants. Fidelity Charitable, for instance, requires donors to recommend grants at least every two years, O'Neill said.
Mary Clements Evans, a certified financial planner in Emmaus, Pa., s aid people using donor-advised funds can get a deduction right away but then take time to research charities by reading annual reports and checking tools like Charity Navigator to help select groups that will use their gift effectively.
"People need to do their due diligence," she said.
Is there time to open a donor-advised fund for 2025?
It's not too late to open a fund for this year. Aloi said online accounts can typically be opened quickly, and funds or securities can be moved electronically. Still, he said, financial firms are often busy in December with year-end transactions, and accounts must be funded by the end of the year so that the contribution counts for the 2025 tax year. "I wouldn't wait too long," he said.
O'Neill said that donations made by check must be postmarked by Dec. 31.
What if I don't itemize contributions?
Since a 2017 tax law significantly increased the standard deduction, fewer tax filers have itemized, making them ineligible to take a deduction for charitable contributions.
But starting next year, people who take the standard deduction ($16,100 for single filers and $32,200 for married joint filers in 2026) can also take a deduction for direct charitable donations of up to $1,000 for single tax filers and $2,000 for married couples filing jointly. (Contributions to donoradvised funds, however, aren't eligible for the deduction, according to Fidelity Charitable.) A similar deduction, at a smaller amount, was temporarily available to encourage giving during the pandemic years of 2020 and 2021.
Because of the change for 2026, said Amy R. Segal, a lawyer at Wilmer- Hale who specializes in charities and nonprofits, "If you're planning to give this December, you may as well give in January."
Charities are expecting that some smaller donations will probably arrive early in the new year, she said, because donors who don't itemize want to get the deduction.
Can I donate from my IRA?
People 70 ½ or older can donate up to $108,000 directly to eligible charities in 2025 from an individual retirement account and have the money excluded from their taxable income. (Donor-advised funds, however, aren't eligible to receive qualified charitable distributions under Internal Revenue Service rules.)
People with traditional IRAs (not Roth IRAs) generally must take withdrawals each year starting at age 73 — even if they don't need the money — which increases their taxable income and may push them into a higher tax bracket. But by making a "qualified charitable distribution" to a charity, donors can meet the requirement while avoiding a higher tax bill.
