Disclaimer: I’m not a CPA or tax accountant. I’m a Registered Investment Advisor. Check with your accountant or tax software or do your own homework to double-check anything I’ve described here. Your tax situation might be very different than the example I’m describing here.
UPDATE: As of 2026, non-itemizing filers can deduct $1,000 if single ($2,000 Married Filing Jointly) off their taxes for charitable contributions to 501(c3) organizations.
Here’s a comparison of the rules pre- and post- change:
| Tax Rule | 2025 Rules | 2026 Rules |
|---|---|---|
| Non-itemizer charitable deduction | None; standard deduction filers could not claim a federal tax deduction for donations. | Up to $1,000 in cash donations may be claimed as a tax deduction ($2,000 for joint filers). |
| AGI floor for itemized charitable deduction | No floor; every dollar is deductible (up to limits). | Only the portion of total charitable contributions above 0.5% of your AGI is deductible. |
| Charitable deduction cap | For those in the 37% tax bracket, the deduction provides a 37% tax benefit. | The tax benefit of the deduction is capped at 35% for top earners. |
Best option if you’re over 70: QCDs
If you’re over 70.5 and you have Traditional IRA/pre-tax 401k money, use Qualified Charitable Contributions by directly sending checks from your Traditional IRA to the 501(c)3 charity of your choice. This gets you an ‘above the line’ (no itemizing required) tax deduction for the full amount of the cash you donate, up to an annual IRS limit of $105,000 (in 2024; adjusted to go up with inflation each year.)
Example: You’re 73 and taking RMDs this year of $40,000. You decide to send $5 K of it to a charity as a QCD. Result: your taxable income from the IRA is reduced to $35,000, a tax-savings of over $1,000 for most people.
Vanguard, for example, makes this very easy to do as part of the flow to withdraw money from your IRA. They send you a check made out to the charity you specify, and then you forward it on to the charity. Fidelity also supports this, although I’m not sure how seamless it is.
Note that you cannot use QCDs to give money to a DAF or a private foundation as of writing.
Gifting appreciated assets
A related strategy to gifting cash is to gift appreciated securities like stock. Typically charities like you to do this only for fairly large– a few thousand dollars at least– gifts, since it’s more of a hassle for them to handle. This can let you ‘double dip’ on tax savings by saving not just the value of the gift, but also on the capital gains taxes. For example, say you have a $10,000 block of Amazon shares you’ve held for many years that have $8,000 of long-term capital gains. If you gift cash AND itemized all of it at the 22% tax bracket, you’d save $10 K * 22% = $2,200. However, if you gifted the $10 K Amazon stock, you save the $2,200 AND the 15% * $8,000 = $1,200 you would’ve paid in capital gains taxes if you had first sold the Amazon shares before donating it as cash.
Charitable Bunching strategy
If you don’t currently itemize, i.e.: your itemized deductions are less than your standard deduction, than any charitable donations you make that don’t put you over the standard deduction ‘threshold’ result in zero tax savings. Once strategy around this is to ‘bunch’ your donations into a single tax year, and then give nothing the following years, to break into the sweet, sweet itemizing zone and secure a tax break.
Example:
Scenario #1: No bunching and not itemizing: In 2024, you and your husband had $10,000 in SALT deductions, $16,000 in mortgage interest deductions, and were planning on making $2,000 in charitable contributions. Your itemized deductions are $28 K, less than the standard deduction of $29,200, so you don’t receive any tax benefit for your $2 K. Your plan was to make this $2 K contribution every year for the foreseeable future.
Scenario #2 with ‘bunching’ and itemizing: Because you’ve consulted a wily financial advisor, he advised you to ‘bunch’ the next 5 years of charitable contributions into one year in order to get a tax break. In 2024 you now have $10 K SALT + $16 K mortgage interest + $10 K charitable contributions. This brings you to $36 K, $6.8 K over the standard deduction, thus saving you 22% * $6.8 K– if you’re in the 22% tax bracket– = $1.5 K in taxes. You make no charitable contributions the next four years, and then repeat the bunching process again if desired.
https://www.uicharitable.org/charitable-bunching
Who does bunching NOT work for?
Those that already itemize before any charitable contributions, or those who won’t itemize even with bunching.
If you’re ALREADY itemizing without including any charitable deductions, and expect to continue to do so, this strategy doesn’t help you. It also doesn’t hurt. If you’re so far from itemizing that even bunching several years of charitable donations won’t get you into itemizing territory– perhaps because you don’t have a mortgage or your charitable contributions are relatively small– this also won’t help you.)
Donor-Advised Funds
Donor-Advised Funds are 501(c)3 companies operated by financial firms that let you take a charitable deduction in the year that you contribute funds to them, but then invest the money and distribute it to charities whenever you see fit in the future. (Often with some minimum activity per year, like at least doing one charitable grant annually.) Fidelity has a great, easy-to-use DAF option that I use. Vanguard also offers DAFs. They charge a percentage of assets under management for this service, around 0.6% as of writing.
Combining DAFs and bunching
While you can use the charitable bunching strategy without a DAF, many people like to give annually vs, say, 5 years’ worth in one year, and nothing for the next four years. DAFs let you get the best of both worlds, in exchange for the annual fee. They also provide you with some time-savings since you can set up annual gifts– called ‘grants’– from your DAF once and let those run as long as you like.
Another benefit is that you’re not forced into deciding WHICH charities to give to all in one year. I have changed my personal charitable philosophy and focus over time, and which I had opened a DAF earlier to spread out my contributions vs concentrating them in one big year like I did earlier.
Gifting appreciated securities to DAFs
You can also use the same trick with gifting appreciated securities to DAFs, then selling them or holding– once they are there, paying no capital gains taxes on the proceeds since the charity– your DAF– doesn’t have to pay those taxes. This is my preferred approach to take advantage of DAFs, gifting appreciated securities, AND bunching all together: gift large blocks of appreciated securities to your DAF every several years.
Inheritance to DAFs
You and your loved ones can also donate to DAFs upon death by listing the DAF as a beneficiary. This could be a really easy, lightweight way to create a family charitable fund, if desired. (I prefer and recommend giving your money while alive, however!) You can name successors to your DAF to manage it after you die as well. Let’s say you have parents who won’t spend all their money before they die, and you as a beneficiary don’t need all of it and would love to direct some to charity. Consider having your parents designate their most taxable assets (usually a Traditional IRA or pre-tax 401k) to the DAF, and/or their least taxable assets (Roth IRAs and taxable brokerages or other property like real estate, due to step-up basis at death) to you or their other individual heirs.
Limits on charitable tax deductions
Make sure you’re aware of the 30% of AGI tax deduction limits for gifting securities with long-term capital gains, and the 60% AGI deduction limit for gifting cash.
