Last Call for Charitable Giving in 2025

Maximize Your Impact Before Year-End

As you plan year-end charitable giving—whether for your own family or in service to your clients—please be aware that 2025 presents a critical window of opportunity. Major provisions new tax legislation (OBBBA) will take effect on January 1, 2026, and they are expected to significantly reshape how charitable gifts are treated for tax purposes. Many donors and advisors may find that the value of charitable deductions is reduced under the new rules. As 2025 comes to a close, now is the time to make the most of current tax benefits for charitable giving. Major changes to federal tax law will take effect in 2026, so acting before December 31, 2025 can help you maximize deductions and support the causes you care about.

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What’s Changing in 2026?

New federal legislation will introduce stricter limits on charitable deductions. Here’s what you need to know:

• Lower deduction rates for high earners
  The top deduction rate will drop from 37% to 35%.
  
• Caps for non-itemizers
  If you take the standard deduction, charitable deductions will be limited to $1,000 for single filers and $2,000 for joint filers.
  
• Minimum threshold for deductions
  Donations must exceed 0.5% of your Adjusted Gross Income (AGI) to qualify for any deduction.

Bottom line: Giving in 2025 could provide greater tax benefits than waiting until 2026.

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Smart Giving Strategies

• Bunch your donations
  Combine multiple years of giving into 2025 to maximize deductions.
  
• Use a Donor-Advised Fund (DAF)
  Contribute now, receive an immediate tax deduction, and recommend grants to charities over time.
  
• Gift appreciated assets
  Donating stocks or other appreciated property can help you avoid capital gains tax while supporting charity.

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Estate Planning Options

Charitable giving can also play a role in your long-term financial plans:

• Charitable Remainder Trusts (CRTs)
  Provide income for yourself or your beneficiaries during your lifetime, with the remainder going to charity. By law, at least 10% of the trust’s initial value must benefit a charitable organization.
  
• Inherited IRA rules
  Beneficiaries generally must withdraw inherited IRA funds within 10 years. Designating a charity as a beneficiary can reduce tax burdens and support your philanthropic goals.

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Act Now

The window to take advantage of current tax rules closes on December 31, 2025.
Contact the Lehigh Valley Community Foundation today to explore the best strategies for your situation.

Please reach out as soon as you are able. We are honored to partner with you as you work to achieve your charitable goals in this important year.

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