Year-End Giving: Three Strategies to Consider

For charitably inclined families, new tax rules in effect this year make it especially worthwhile to revisit how you fund your giving, what assets you use, and when you give. The changes may affect the most tax-efficient approach, particularly when charitable decisions intersect with income, investments, and retirement planning.

Consider Giving Directly From an IRA

For taxpayers age 70½ or older, a qualified charitable distribution (QCD) allows funds to be transferred directly from an IRA to an eligible charity. Because the distribution is excluded from income rather than claimed as an itemized charitable deduction, it can be an especially useful way to give under the new rules.

Beginning this year, taxpayers who itemize can deduct charitable contributions only to the extent those contributions exceed 0.5% of adjusted gross income. QCDs are not subject to that floor. For taxpayers who are also subject to required minimum distribution (RMD) rules, QCDs can count toward those distributions. Reducing adjusted gross income may provide additional tax benefits in some circumstances.

Donor-advised funds and private foundations are not eligible to receive QCDs.

Look Beyond Cash

For donors with appreciated investment portfolios, long-term appreciated securities can be a particularly tax-efficient source for charitable gifts.

Rather than selling the securities and donating the cash proceeds, you may be able to donate the securities directly. Doing so may allow you to avoid recognizing the embedded capital gain while still receiving a charitable deduction based on the securities’ fair market value, subject to applicable limitations.

That can make it worthwhile to consider not only how much you plan to give, but also which assets you use to fund the gift.

Be More Deliberate About Timing

The new 0.5% charitable deduction floor also makes the timing of gifts more important. Because the floor applies each year, some donors may benefit from bunching several years of charitable contributions into a single year rather than making the same contribution annually. Bunching can help contributions exceed the deduction floor and qualify for a charitable deduction that might otherwise be limited or unavailable.

A donor-advised fund can help facilitate this approach. You can make a larger charitable contribution in one year and then recommend grants to charities over time, allowing the timing of the tax deduction and the timing of your charitable support to differ.

Bunching still requires careful planning. Charitable deductions remain subject to limits based on adjusted gross income, the type of property contributed, and the recipient organization.

Keep the Broader Picture in View

Charitable planning should not happen in isolation. A high- or low-income year, a large capital gain, required retirement distributions, or changes in an investment portfolio may all affect the most effective way to give.

Coordinating charitable decisions with the rest of your year-end planning can help make you give more thoughtfully and tax efficiently. For a broader discussion of tax planning opportunities, see 2026 Year-End Income Tax Planning Under OBBBA.