If charitable giving is part of your financial strategy, the final months of 2025 may be an ideal time to act. New rules under the One Big Beautiful Tax Bill Act (OBBBA), effective January 1, 2026, could reduce the tax benefits of charitable contributions for many taxpayers.
Starting in 2026, non-itemizers can claim a modest charitable deduction—up to $1,000 for single filers and $2,000 for joint filers. While helpful, this benefit is limited compared to what itemizers can achieve through strategic giving in 2025.
Starting in 2026, itemized charitable deductions will only apply to contributions exceeding 0.5% of your AGI. For example, with a $200,000 AGI, the first $1,000 of giving won’t be deductible. High earners will also see their deduction rate capped at 35%, down from 37%, reducing the overall tax benefit.
With the 0.5% AGI floor on charitable deductions taking effect in 2026, 2025 presents a final opportunity to maximize current rules. Taxpayers who itemize can benefit by “bunching” donations—making a larger gift this year instead of spreading contributions over time. This strategy is especially useful given the higher standard deduction under OBBBA ($31,500 for joint filers), which makes it harder to exceed the threshold and benefit from itemizing. Concentrating charitable giving in 2025 can help push total deductions above that limit and unlock meaningful tax savings.
For example, if you typically give $5,000 annually and itemize, contributing multiple years’ worth of donations before December 31, 2025, allows the entire amount to be deductible under current rules. Waiting until 2026 would require exceeding the new 0.5% AGI threshold before any portion becomes deductible and you may not exceed the standard deduction.
Many donors use a donor-advised fund (DAF) to front-load charitable giving and lock in a full 2025 tax deduction, while still supporting charities over time. If considering a DAF, start early to ensure contributions are completed before year-end. It’s also important to choose the right assets: donating long-term appreciated investments is typically more tax-efficient than short-term holdings, as you can deduct the full fair market value and avoid capital gains tax. Short-term assets, by contrast, are only deductible up to their cost basis. Keep in mind that in 2025, cash donations are deductible up to 60% of AGI, while non-cash gifts like securities are limited to 30%. Being aware of these limits helps avoid unintended carryforwards and ensures you maximize your current-year tax benefit.
Every taxpayer’s situation is unique, and the right timing will depend on your income, filing status, and overall deductions. For that reason, it’s a good idea to review your charitable giving strategy with your trusted Krilogy advisor before the end of the year to ensure your contributions are structured in the most tax-efficient way possible.
This information is distributed for educational purposes only, and it is not to be construed as an offer, solicitation, recommendation, or endorsement. Krilogy® does not provide tax and legal advice. Krilogy® is affiliated with Krilogy Tax Services, LLC. Krilogy® Tax Services provides tax planning and preparation services for an additional cost to Krilogy® clients. You should consult your attorney or qualified tax advisor regarding your situation.
