Charitable giving has always been about generosity, but it’s also about being strategic with the goal being to maximize deductions. With new tax law changes taking effect in 2026, the way your contributions are deducted could look very different. That means 2025 is the year to act—both to support the causes you care about and to lock in the most favorable tax treatment.
If you’ve been considering making larger donations, funding a donor-advised fund, or using your retirement distributions for giving, this is the moment to take a closer look.
What’s Changing in 2026
Beginning in 2026, a few key changes could limit the tax benefits of your donations:
- A new 0.5% AGI floor: Only contributions that exceed 0.5% of your Adjusted Gross Income will be deductible. Small and moderate gifts may no longer provide a tax benefit.
- Carryovers get caught: Even if you make donations in 2025, any unused deduction that carries forward into 2026 will also be subject to the 0.5% floor.
- Non-itemizer wrinkle: Non-itemizers will have a limited deduction option for cash contributions, but donor-advised funds won’t qualify.
- Other limits remain: The 60% AGI limit for cash contributions is permanent, but future years may leave less room to claim deductions.
Translation: Every dollar you give in 2025 has the potential to go further from a tax perspective than in 2026 and beyond.
Why Carryovers Are Now a Bigger Issue
In the past, charitable contribution carryovers were straightforward—you could roll forward unused amounts for up to five years. Starting in 2026, those same carryovers may lose value if they don’t exceed the 0.5% floor.
Example: If your AGI is $400,000, the first $2,000 of contributions (including any carryovers) won’t count toward a deduction starting in 2026. If you’re planning large gifts this year, it’s worth discussing with your CPA whether you should spread them or consolidate them.
Smart Giving Strategies to Maximize Deductions for 2025
- Frontload Your Giving
- If you already know you’ll be making multi-year gifts, consider moving them into 2025 to maximize deductibility.
- Qualified Charitable Distributions (QCDs)
- If you’re age 70½ or older, QCDs let you donate distributions directly from your IRA. This strategy is particularly helpful for Required Minimum Distributions (RMDs). You directly reduce your taxable income and aren’t affected by the itemized deduction rules or AGI floor.
- Pro tip: Tell your CPA about your QCDs—don’t assume they’ll see them automatically! They are not routinely noted on the distribution forms.
- Bunching Contributions
- Combine several years of charitable giving into 2025 to ensure you exceed the standard deduction threshold and capture itemized benefits.
- Donor-Advised Funds (DAFs)
- Contribute now, take the full deduction in 2025, and spread the distributions to charities over time.
- Especially useful if you want the tax benefit now but prefer a slower giving schedule.
- Coordinate With Your CPA
- Talk about your current year AGI, projected deductions, and whether your giving plan aligns with the 2026 changes.
Common Missteps to Avoid
- Thinking “I’ll catch up later”: Waiting until 2026 may reduce your deductions.
- Overloading this year without a plan: Don’t give so much in 2025 that you leave yourself with unhelpful carryovers especially for those with higher income.
- Forgetting to report QCDs: Your tax preparer needs this info—don’t let it get lost in the shuffle.
- Misunderstanding donor-advised fund rules: They qualify in 2025, but not under the new non-itemizer deductions in 2026.
What to Do Before Year-End 2025
As October turns into year-end planning season, here’s your checklist:
- Review your 2025 charitable contributions to date.
- Ask your CPA about how carryovers will affect you.
- Decide if bunching or a DAF makes sense for your situation.
- If eligible, arrange QCDs before December 31.
- Document and finalize all gifts before year-end to meet IRS deadlines.
Bottom Line
2025 is a rare window: you can maximize your deductions and give generously before the new 2026 rules reshape charitable giving. Don’t let the year close without a plan.
Next step: Talk with your CPA now to explore QCDs, donor-advised funds, and bunching strategies. The earlier you act, the more flexibility you’ll have—and the more good your dollars can do. Contact us today!
