2025 is a Great Year for Charitable Giving
Giving back is deeply rewarding. Many people volunteer their time to support charitable organizations, and if you’re in a position to give financially, 2025 is an especially advantageous year to do so—and Giving Tuesday is on December 2, 2025.
Nonprofits are struggling. Many rely on a mix of individual donations, foundation support, and government grants—but this year, government funding has been cut, and private contributions haven’t been enough to fill the gap. As a result, some organizations have closed their doors entirely, while others have drastically reduced programs or expect to do so in 2026.
At the same time, community needs are rising. Food banks are serving record numbers. Homelessness continues to grow in many cities. And globally, conflict, famine, and humanitarian crises are intensifying. It’s a critical moment for nonprofit support. If you plan to make a contribution, it’s important to ensure you receive the maximum tax benefit from your donation. Here are several ways to do just that.
Give Thanks for a Robust Portfolio and Low Taxes
The stock market has done well this year and people’s portfolios have increased greatly. The One Big Beautiful Bill Act (OBBA) has made permanent many of the tax cuts from President Trump’s first term and include additional cuts for some Americans. Many of us are wealthier and are likely to pay less taxes. Our capacity to give charitable donations has increased.
If you decide to donate to nonprofits this year, you’ll want to structure your giving strategically to maximize your tax benefits. Here are the most tax-advantaged donation methods, ranked from most beneficial to least.
Qualified Charitable Donation From Your IRA
If you are over 70 ½, you can make a donation to a 501(c)(3) charity directly from your IRA or inherited IRA as a Qualified Charitable Donation(QCD). While you do not get a tax deduction for this donation, you save the tax which would have been paid if you withdrew the money from the IRA. If you are old enough to need to make Required Minimum Distributions (RMDs) and you make the QCD before you take your RMD for the year, then the QCD can take the place of your RMD. You also lower the balance of your IRA, which can reduce your future RMDs. The QCD is available even if you don’t itemize your deductions and the tax savings is equivalent to the charitable deduction. There are some rules to follow:
- The maximum QCD per person is $108,000 for 2025.
- The payment must be made directly from the IRA to the charity. You cannot make a withdrawal and then pay the charity.
- The charity must be a 501(c)(3).
- You cannot donate to a private foundation or donor advised fund (DAF).
Itemized Donation of Highly Appreciated Securities
With the higher standard deduction introduced in the 2017 Tax Cuts and Jobs Act (TCJA), fewer people can itemize their deductions. The $10,000 cap on deductions for State and Local Taxes (SALT) is also a factor. This meant that unless you donate a great deal to charity, you didn’t get a tax deduction for the donation.
The OBBA may have changed this for some taxpayers. For tax years 2025-2029, the SALT deduction cap goes up to $40,000. This means that if you live in a high tax state, you are likelier to be able to itemize your deductions. Remember this starts in 2025.
You don’t have to donate cash. The best thing to donate is highly-appreciated securities. So if you made a lot of money on tech stocks, you can transfer the stock directly to your favorite charities or a DAF. You save by not having to pay capital gains taxes plus you get a tax deduction on the entire donation. There is a cap of 30% of your Adjusted Gross Income (AGI), although any excess can be carried forward to later years.
2025 is the year to maximize this deduction because starting in 2026, there will be a 0.5% floor on the charitable deduction. That means starting in 2026 your deduction is reduced by the first 0.5% of your AGI. For example, if your AGI is $200,000 and donate $10,000 of highly appreciated securities, you will only get a $9500 charitable deduction. If you make the donation in 2025, you get the full $10,000 deduction.
Donations of Cash
You can donate cash to charities and if you can itemize your deductions, you will get a tax deduction for your cash donation. The cap for deductions for cash donations is a bit higher: 50% of your AGI. The same floor applies starting in 2026.
What if you Can’t Itemize?
If you can’t itemize your deductions because your deductions won’t exceed the standard deduction, you should wait to make your donation until 2026. There will be a new deduction that anyone can take for cash donations, starting in 2026. The deduction is $1000 max for single filers and $2000 max for married filers.
Season of Giving
This holiday season, I invite you to join me in increasing support for those in need—giving back to our communities and to the world in meaningful, impactful ways. Some of the various charities I have donated to in 2025 include:
- Community Food Bank of New Jersey
- Center for Food Action
- Family Promise of New Jersey
- New York New Jersey Trail Conference
- National Public Radio
As we navigate a time of significant economic imbalance, I believe those who are fortunate have a unique opportunity to make a difference. If this resonates with you, there’s no better moment than now.
This article contains my views and opinions, which are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not consider any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
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