Making the Most of Your 2025 Charitable Giving: What You Need to Know About New Tax Laws

Nov 24

Written By Greater Washington Community Foundation

As we approach the end of 2025, there's an important opportunity for thoughtful donors like you to maximize both your charitable impact and your tax benefits. A new tax law signed this summer has made some provisions permanent while introducing others that will take effect in 2026—creating a unique moment to plan strategically.

What's Staying the Same

Many of the tax benefits you've come to rely on will remain the same:

Tax brackets remain steady. The current tax rates—10%, 12%, 22%, 24%, 32%, 35%, and 37%—are here to stay, giving you predictability for long-term planning.
Standard deduction gets a modest boost. For 2025, the standard deduction is $15,750 for individuals and $31,500 for married couples filing jointly, with annual adjustments for inflation going forward.
Seniors receive an extra benefit. If you're 65 or older, you can claim an additional $6,000 deduction for tax years 2025 through 2028 (income restrictions apply).
Cash gift limits remain generous. You can continue to deduct cash donations to public charities up to 60% of your adjusted gross income (AGI) when you itemize.
Estate tax exemption increases. The federal estate and gift tax exemption will rise to $15 million per person in 2026 and be indexed for inflation thereafter.

What Changes in 2026

Several new provisions will reshape the charitable giving landscape starting next year:

A New Deduction for Non-Itemizers - Beginning in 2026, even if you take the standard deduction, you can deduct up to $1,000 ($2,000 for married couples) in charitable contributions of cash. This benefit is permanent but not indexed for inflation. Note: Gifts to donor-advised funds don't qualify for this particular deduction.
A Giving Floor for Itemizers - If you itemize your deductions starting in 2026, you'll need to donate at least 0.5% of your AGI to receive a tax benefit for your charitable giving.
A Cap for Top Earners - High-income taxpayers currently receive a 37-cent tax benefit for every dollar deducted. In 2026, that benefit will be capped at 35 cents per dollar for those in the top tax bracket.

Why This Year Matters

If you itemize your deductions or are in the highest tax bracket, 2025 may be an especially strategic time to increase your charitable giving. By making gifts before December 31, you can:

Maximize your tax deductions at current rates and consider bunching your charitable gifts this year into a donor-advised fund

Avoid the new 0.5% AGI floor that takes effect in 2026

Capture the full 37% deduction if you're a top earner

Make a meaningful difference in your community now

Smart Giving Strategies for Year-End

Give cash. A check or online donation is simple and immediate. Just remember: if mailing a check, it must be postmarked by December 31 to count for 2025.
Donate appreciated assets. Gifts of stock, mutual funds, or other appreciated assets you've held for more than a year can provide a double benefit—an income tax deduction plus elimination of capital gains tax on the appreciation.
Recommend a grant from your donor-advised fund. While you received your tax deduction when you contributed to your fund, recommending a grant before year-end allows you to make an immediate impact in the community for organizations you care about – make sure to have grant recommendations in by December 15th.
Make a qualified charitable distribution from your IRA. If you're 70½ or older, you can transfer up to $108,000 directly from your IRA to charity. You won't owe income taxes on the direct transfer, and for those 73 years and older, it counts toward your required minimum distribution. Ensure that your IRA administrator completes the transfer by December 31 and includes your name on the distribution. While a qualified charitable distribution cannot be made to a donor-advised fund, if you have another fund type with The Community Foundation, such as a designated, scholarship, or field-of-interest fund, or want to make a gift to the Community Foundation, this gift strategy works for those funds. Call us if you have any questions.

Take the Next Step

We encourage you to consult with your tax advisor to discuss how these changes may affect your personal giving strategy in 2025 and beyond.

Your generosity transforms lives throughout our region. Whether you're considering a year-end gift or planning for the future, we're here to help you achieve your charitable goals in the most effective way possible.

Have Questions?

Greater Washington Community Foundation