3 Reasons to Boost Your Charitable Giving in 2025 Before Tax Law Changes
Maximize your charitable impact before 2026’s tax changes. Accelerate gifts this year, donate appreciated stock, or use a donor-advised fund to lock in full deductions now while spreading grants over time, boosting both tax efficiency and your philanthropy’s reach.
As an investor, you’re always looking for ways to maximize returns, minimize taxes, and make your money work harder for you. This year, your charitable giving strategy presents a compelling, time-sensitive opportunity to achieve all three—especially for those who itemize deductions.
Significant tax law changes, scheduled to take effect in January 2026, can reduce the tax-saving power of charitable donations for itemizers. Now is the time to consider accelerating gifts you planned for future years into this one.
Here are the top three reasons to act now and maximize your charitable giving before the calendar turns.
1) Anticipate Reduced Deductions Next Year
For many taxpayers who itemize their deductions, charitable giving will become less tax-advantaged starting in 2026 because of two new rules: a deduction floor and a rate cap.
First, a new 0.5% of adjusted gross income, or AGI, floor for charitable contributions will take effect. Currently, if you itemize, every dollar you donate (up to the AGI limit) is generally deductible. Starting in 2026, you will only be able to deduct the portion of your contributions that exceeds 0.5% of your AGI. For example, if your AGI is $500,000, the first $2,500 in donations would no longer be deductible. This new floor could significantly reduce the tax benefit for those with high AGI and moderate giving levels.
Second, a 35% deduction cap will affect taxpayers in the highest income bracket. Currently, a charitable deduction shields income at your marginal tax rate, which is 37% for the top bracket. In 2026, the value of itemized deductions for those in the 37% bracket will be capped at a 35% tax rate. While a small difference, on substantial charitable gifts, this 2% reduction in value can add up.
By accelerating future gifts into the current year, you can take advantage of the current more favorable rules, maximizing your tax deduction before these new limits take effect. This strategy is often referred to as “bunching” and is a powerful planning tool.
2) Maximize the Tax Benefit of Appreciated Stock
For investors with portfolios that have benefited from strong market performance, now is an ideal time to review your holdings for highly appreciated assets, such as stocks, mutual funds, or exchange-traded funds, that you’ve owned for more than one year. Donating these assets directly to charity is one of the most tax-efficient ways to give.
When you donate appreciated stock, you receive a double tax benefit:
You receive a deduction for the full fair market value of the stock at the time of the gift (subject to AGI limits).
You avoid paying capital gains tax on the appreciation.
If you were to sell the stock and donate the cash proceeds, you would owe capital gains tax on the profit, significantly reducing the amount available for both your deduction and the charity. The charity, being tax-exempt, can sell the stock immediately without incurring the capital gains tax you would have owed. This allows the charity to receive a larger gift and gives you a much bigger tax benefit than a cash gift of the same net amount.
This advantage, combined with the more favorable deduction rules before 2026, makes donating appreciated assets a particularly potent strategy right now.
3) Use a Donor-Advised Fund to Spread Future Grants
If you decide to “bunch” several years of giving into a single, large contribution now to capture the maximum deduction before the 2026 changes, you may wonder how you can continue to support your favorite charities in 2026 and beyond without having to make a new gift every year. The answer is a donor-advised fund.
A donor-advised fund is essentially a personal charitable savings account.
You make a contribution (cash or appreciated stock) to your account in the current year, and you claim the full tax deduction immediately. This accelerates your deduction into a year with more favorable tax laws.
The money in your fund is invested and grows tax-free.
You can then recommend grants from your fund to any qualified public charity on your own timetable—next month, next year, or even decades from now. This means you can fund the account in 2025 for a large deduction and then use those funds to send grants to charities in 2026, 2027, and beyond, effectively spreading your actual charitable grants over time without losing the immediate, larger deduction.
By leveraging a donor-advised fund now, you can lock in the current year’s tax benefits and maintain a consistent, long-term philanthropic presence.
The Window Is Closing
For investors committed to philanthropy, 2025 represents a unique window to maximize the tax efficiency of your giving before the new limits take effect.
Talk to your tax or financial advisor now to evaluate your AGI, review your itemized deductions, and identify any highly appreciated assets that could be excellent candidates for a tax-smart gift. Don’t wait. Proactive planning this year is the key to maximizing tax savings for your charitable goals.