I can’t believe I’m saying this, but there are only four months left in 2025. And these four months are actually your golden window to maximize your tax savings. How?
Through charitable giving. Because of the One Big Beautiful Bill Act (OBBBA), charitable deduction rules are shifting a lot starting in 2026.
Which means you should adjust your giving strategy now to squeeze every drop of benefit out of the current system. Let me show you how…
First, there’s a big hurdle for taxpayers who opt for itemizing deductions: They can only deduct charitable contributions that exceed 0.5 percent of their taxable income.
That means if your taxable income is 500K, for example, the first 2.5K of giving doesn’t count. Only amounts above that threshold are deductible.
Also, the 60 percent limit of the max amount of cash contributions you can deduct from your Adjusted Gross Income is now permanent.
And for those in the top brackets (the 37 percent income tax bracket), itemized deductions will be capped at a 35 percent marginal rate. Which effectively reduces the value of each deduction dollar.
Starting in 2026, those who don’t opt for itemizing deductions can claim a permanent charitable deduction of up to 1K (single) or 2K (married filing jointly) for cash contributions to qualified public charities.
This is above and beyond the standard deduction and will directly reduce your taxable income.
But (important nuance) it only applies to cash gifts to public charities. NOT contributions to donor-advised funds or private foundations.
Quick tip if you’re a non-itemizer: track your cash donations carefully. Hitting the 1K (or 2K) cap could mean straightforward tax savings each year.
The main strategy I’m recommending to all my itemizing clients right now? We tax pros call this “bunching.”
Instead of spreading your donations across multiple years, you “bunch” several years’ worth into one big gift in 2025.
That big contribution secures a large deduction under the current rules (no 0.5 percent floor yet).
Then, in 2026 and beyond, you can take the standard deduction without worrying about missing out.
Think of it as front-loading your generosity for tax purposes.
And the smartest way to bunch: use Donor Advised Funds (DAFs). Here’s how it works:
Speaking of charitable contributions - we're in the works of creating a page on our site dedicated to some preferred 501(C)(3)s if you're in the market. Be on the look out!
“How much can I deduct for charitable giving in 2026?”
Starting in 2026, itemizers can only deduct gifts above 0.5 percent of taxable income. Example: If you make 500K, the first 2.5K of giving won’t count towards the deduction.
“Should I make a big donation before 2026?”
Yes. 2025 is your “golden window” in which you can deduct the full amount under current rules. After 2026, new limits reduce the tax benefit.
“Do state tax laws follow these federal changes?”
Not necessarily. Some states conform to federal rules, others decouple. This could mean your charitable deduction looks very different at the state level. It’s worth modeling out both (and we can help).
“What’s the best way to bunch donations?”
A Donor-Advised Fund (DAF) lets you make one large contribution in 2025, get the full deduction now, and then spread the giving out to charities over time.
“Can I still carry forward excess charitable contributions?”
Yes, the existing 5-year carryforward rule remains. If you contribute more than the AGI limit, you can carry the excess forward, subject to the same percentage limitations.
“What counts as a “qualified public charity” for the 1K/2K deduction for non-itemizers?
Think traditional nonprofits under IRC §170(b)(1)(A): churches, schools, hospitals, and publicly supported organizations. Not included: donor-advised funds, supporting organizations, or private foundations.
“Do pledges count for 2025 deductions?”
No. Only donations actually made by December 31, 2025, qualify.
“What if I normally give small amounts, like 700 dollars a year?”
In 2026, you’ll still get to deduct that amount. But it might make sense to increase it to 1K so you can claim the full new benefit.
Where I can help
If you keep doing what you’ve always done with charitable giving, you may find yourself losing out on deductions after 2025. And you don’t have this window of opportunity to make the most of this year’s current rules for much longer.
So, let’s set up a time to map out your charitable giving plan for the rest of 2025 and beyond. That way, you’ll step into the new rules already prepared AND already ahead:
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