Don’t Lose Your Charitable Deduction: Why 2025 is a Critical Window for Giving

For Those Who Don’t Typically Itemize

If you’re like most taxpayers, you probably take the standard deduction. It’s simple, and for many, it provides a larger tax benefit than adding up individual deductions.

The Challenge: High Standard Deduction

The standard deduction is currently quite high at $31,500 for married couples and $15,750 for single filers in 2025. To get a tax benefit from itemizing, your total deductible expenses (like mortgage interest, state and local taxes, and charitable gifts) must exceed this amount.

While a high standard deduction is generally a good thing, it means that for many people, their charitable donations don’t provide any extra tax savings. If your total deductions fall short of the standard amount, your giving goes unrecognized on your tax return.

The Solution: “Stacking” Donations in 2025

There is a smart strategy to overcome this hurdle called “stacking” or “bunching.” It involves consolidating several years of your planned charitable giving into a single, large contribution in 2025. By doing this, you can push your itemized deductions over the standard deduction threshold for this year and claim a significant tax benefit.

Here’s a quick example:

The Problem: Imagine your household typically has $20,000 in itemized deductions from mortgage interest and state and local taxes. You also donate $10,000 to charity each year. Your total deductions come to $30,000. Since this is less than the $31,500 standard deduction, you would take the standard deduction, and your $10,000 gift wouldn’t provide a direct tax benefit.
The “Stacking” Solution: Instead of donating $10,000 each year, you could contribute five years’ worth of donations—$50,000—all at once in 2025. Your itemized deductions for this year would jump to $70,000 ($20,000 + $50,000). This total is well above the standard deduction, allowing you to claim a much larger deduction and lower your 2025 tax bill.

The Best Tool: A Donor-Advised Fund (DAF)

Stacking donations doesn’t mean you have to give a five-year lump sum to a single charity all at once. A Donor-Advised Fund (DAF) is the perfect tool for this strategy. Think of it as a personal charitable savings account.

Here’s how it works:

Get the Deduction Now: You contribute your “stacked” donation—for instance, $50,000—into your DAF before the end of 2025. You receive the full tax deduction for that $50,000 on your 2025 tax return.
Support Charities Later: The funds sit in your DAF, where they can be invested and grow tax-free. You then recommend grants from the DAF to your chosen charities over time, such as $10,000 per year for the next five years.

A DAF gives you the power to secure a large, tax-deductible contribution today while maintaining control over when and how your chosen organizations receive the funds.

A Small Break for Non-Itemizers in 2026

There is one positive change on the horizon. Starting in 2026, taxpayers who do not itemize will be able to claim a deduction for charitable donations. This deduction is capped at $1,000 for single filers and $2,000 for married couples filing jointly. However, donations to donor-advised funds or private non-operating foundations are not eligible for this new benefit.

While helpful, this modest deduction pales in comparison to the benefits available through strategic giving in 2025.

For High-Income Earners

If you are a high-income earner, the tax landscape for charitable giving is about to become more restrictive. New regulations taking effect in 2026 will limit the value of your itemized deductions, making 2025 a key year to maximize contributions.

The Challenge: New Deduction Limits in 2026

The 2017 tax law (TCJA) temporarily suspended the old “Pease limitation,” which reduced deductions for high earners. Now, with the One Big Beautiful Bill Act (OBBBA), that limit is gone for good. However, there’s a new restriction taking its place.

Starting in 2026, the “2/37 Rule” will apply. For those in the highest tax bracket of 37% (single filers earning over $626,350 or married couples making more than $751,600) itemized deductions will be capped. This rule limits your tax benefit to 35 cents for every dollar you deduct. Simply put, your charitable gifts in 2026 will be worth less on your tax return than they are today.

Additionally, a 0.5% AGI deduction floor will be introduced. Beginning in 2026, donations will only be deductible after they exceed 0.5% of your adjusted gross income (AGI). So, if your household AGI is $1,000,000, the first $5,000 of your charitable donations won’t be deductible.

The Solution: Maximize Your Giving in 2025

These changes make 2025 the last chance to make a large charitable contribution that is fully deductible before the new limits chip away at the benefit. By making a significant gift this year, you can lock in the current, more favorable tax treatment.

Using a Donor-Advised Fund is an excellent strategy here. You can make a substantial contribution to a DAF before year-end, claim the maximum possible deduction on your 2025 return, and then distribute the funds to your chosen charities over the coming years, bypassing the 2026 restrictions.

The Clock is Ticking: Take Action Before Year-End

This window of opportunity won’t last long. If you’re planning to maximize your tax benefits, now is the time to act. By contributing before December 31, 2025, you can lock in a well-earned tax break for your generosity. Waiting until next year could reduce the impact of your future contributions.

At SME CPAs, we’re here to help you navigate these changes with a plan tailored to your needs. We understand the value of smart financial planning and supporting the causes that matter to you.

There’s still time to make a meaningful difference for both your community and your tax situation. Reach out to SME CPAs today to see how we can help you make the most of your giving.

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