Major changes to charitable tax deductions take effect in 2026, and they could significantly reduce the benefits you receive for your generosity. 2025 is your final opportunity to lock in today’s favorable rules.

What’s Changing?

• Standard Deduction: In 2025, it’s $15,750 (single) and $31,500 (joint). Most taxpayers won’t itemize.
• Starting 2026:
  • Above-the-Line Deduction: Up to $1,000 ($2,000 for couples) for cash gifts—even if you don’t itemize.
  • 0.5% AGI Floor: First 0.5% of adjusted gross income given won’t count toward deductions.
  • 35% Cap: High earners (taxable income > $640,600 single OR  $768,700 married filing jointly) will only get $0.35 tax benefit per $1 donated.

Why Act Now?

2025 is the last year without these limits. By bunching donations, combining several years of giving into one, you can exceed the standard deduction and maximize tax savings.

How to Do It

• Give multiple years’ worth of donations in 2025.
• Use a Donor-Advised Fund (DAF) to spread gifts to charities over time while locking in your 2025 tax deduction.

EXAMPLE

The Jones family has the following tax-deductible expenses:

Without Charitable Bunching

• 2025: $20,000 (charity) + $18,000 (other itemized deductions) = $28,000
• Standard deduction 2025: $31,500 (Married couples filing jointly)
• 2026: $20,000 (charity) + $18,000 (other itemized deductions) = $28,000
• Standard deduction 2026: $32,200 (Married couples filing jointly)
• Charitable tax deduction:  $0 (doesn’t exceed standard deduction)
• Total deductions over two years: $63,700 (the standard deduction without itemizing)

In this scenario, it is smarter for them not to itemize in either year because their deductions do not surpass the 2025 standard deduction ($31,500). They will take the standard deduction in 2025 and in 2026, for a total deduction of $63,700 across both years.

With Bunching via DAF

• 2025: $40,000 (charity) + $18,000 (other itemized deductions) = $58,000
• Standard deduction 2025: $31,500 (Married couples filing jointly)
• 2026: $0 (charity) + $18,000 (other itemized deductions) = $18,000
• Standard deduction 2026: $32,200 (Married couples filing jointly)
• Total deductions over two years: $90,200

Here, they will itemize their 2025 tax deductions and choose to take the standard deduction in 2026, for a total deduction of $90,200 across both years.

Through the donor advised fund, the Jones family can still recommend supporting their favorite nonprofits in 2026 and beyond.

Instead of giving $20,000 each year for two years, donate $40,000 in 2025. You’ll itemize and potentially save in taxes, then distribute funds gradually through a Donor Advised Fund.

Who Should Consider Bunching?

Charitable bunching may be right for you if:

• Your deductions hover near the standard deduction threshold.
• You expect a high-income year (e.g., bonus, investment gains).
• You anticipate lower income in future years (e.g., retirement).
• You want to maximize giving while minimizing taxes.

Final Thoughts

Consult a tax advisor to tailor this strategy to your financial situation and ensure compliance with IRS rules. To fully maximize the available tax benefits, donors now need greater flexibility in their giving strategies. In 2025, this may mean making a larger contribution using a practice known as bunching. For those who still want to maintain consistent annual support for their favorite nonprofits, Donor-Advised Funds (DAFs) can offer the ideal solution.

For personalized support for using your Donor Advised Fund (DAF) at the Spartanburg County Foundation, or to open a DAF, please contact Karen Nichols, Vice President of Philanthropic Services via email or call the Foundation office at 864-582-0138.