Charitable Giving Tax Strategies to Consider in 2025-2026

There are two big tax benefits to being philanthropic during your lifetime: tax deductions and estate reduction. You also have the opportunity to witness the impact your generosity makes. These charitable giving tax strategies can help minimize your tax burden now and your state taxes later while boosting a cause or improving your community.

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Strategy 1: Consolidate donations into high income years

In some years you may produce more income than in others (if you receive a big bonus or happen to sell a business, for example). Instead of making smaller annual donations, consider combining a few years’ worth of donations into one larger donation during those high-income years.

How it helps you save: By grouping donations, you can itemize during the high-income year and take the standard deduction during other years. The maximum income tax deduction for charitable contributions is 50% of your adjusted gross income each year, but in some cases lower limits might apply.

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Strategy 2: Donate highly appreciated assets

If you have assets that have appreciated a lot over time, such as stocks or real estate, donating them may mitigate capital gains tax, income tax and estate tax.

How it helps you save:

• Selling assets at a profit could generate a big capital gains tax bill. Donating these assets to charity can help avoid that big tax bill. 

• You may also get a deduction for the full appreciated value of the asset, which can reduce your income tax bill^[0]

  IRS.gov. Publication 526, Charitable Contributions. Accessed Oct 11, 2025.

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•  Donating highly appreciated assets can help keep the size of your overall taxable estate below the estate tax threshold. The federal estate tax ranges from 18% to 40% and generally only applies to assets over $13.99 million in 2025 or $15 million in 2026.

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Strategy 3: Use a donor-advised fund

You can donate cash or other assets to a donor-advised fund (DAF), where the assets can continue to grow tax-free and you can recommend fund disbursements over time to the causes and organizations you care about. Many brokerage firms or local community foundations can establish a DAF for you.

How it helps you save: Donating through a DAF gives you an immediate income tax deduction in the year you contribute the assets, even if the DAF plans to disburse the assets to charity over several years. The donation can also reduce the size of your taxable estate, possibly reducing estate taxes later. Also, you could deliberately time your contribution to a DAF to coincide with a high-income year to get a more valuable tax deduction.

Strategy 4: Roll donations over to charity

Retirees with traditional IRA accounts must take required minimum distributions after age 72. The distributions can push some people into a higher tax bracket.

How it helps you save: People who don’t need the cash from the RMD could make a qualified charitable distribution after age 70½. QCDs allow you to roll your RMD directly over to a qualified charity (up to $108,000 in 2025) and thus reduce your taxable income^[0]

Strategy 5: Give your retirement plan to charity

A tax-advantageous way to make donations when you die is by naming a qualified charitable organization as the beneficiary of your 401(k), IRA or other tax-deferred retirement plan. Additionally, beneficiaries of inherited IRAs must withdraw all of the money within 10 years, which reduces the tax-deferred growth potential of inherited IRAs.

How it helps you save: Naming heirs as the beneficiaries of your retirement accounts means they may have to pay income tax and potentially estate tax on withdrawals, depending upon the size of your taxable estate. Even leaving a portion of your retirement plan to charity can help secure some tax benefits for your heirs.

Strategy 6: Charitable remainder trusts

A charitable remainder trust, or CRT, is an irrevocable trust that allows the grantor, or owner of the trust, to transform highly appreciated assets into an income stream.

How it helps you save: The grantor gets a tax deduction when they put the assets in the trust, avoids capital gains taxes when the asset is sold and curtails future estate taxes. Once the grantor (or the grantor’s chosen noncharity heirs) dies or the term of the income stream ends the remaining assets go to a charity the grantor has chosen.

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Strategy 7: Charitable lead trusts

A charitable lead trust is an irrevocable trust that is the opposite of a charitable remainder trust. A CLT pays an income stream out to a qualified charitable organization for a set period of time, and when that term is up, hands the remaining trust assets over to the grantor’s heirs.

How it helps you save: The grantor receives a tax deduction for the present value of the income stream donated to charity. The grantor is able to remove highly appreciated assets from their estate and transfer assets to heirs without any gift or estate tax consequences.