The holidays are a great time to be generous while also planning for year-end estate and tax planning.
Qualified Charitable Distributions
Charitable giving of up to $108,000 can be donated directly from a retirement account when used to account for Qualified Charitable Distributions (QCD). This applies to individuals over the age of 70 1/2.
The benefit of giving directly from QCDs translates into not claiming the distribution as income on your tax return.
529 College Savings Accounts
Another year-end strategy to consider includes front-load funding a 529 college savings account.
Donor-Advised Funds
A donor-advised fund can be an easy and tax-smart investment option for charitable giving. After you set up your account, you can contribute cash, securities, or appreciated assets. Any assets contributed by December 31 are eligible for a 2025 tax deduction. Please note that new donor-advised funds must be opened by mid-December in order to qualify for a 2025 tax deduction.
Gifting Appreciated Assets with Potential Multi-Faceted Tax Benefits.
If you itemize deductions on your tax return instead of taking the standard deduction, donating publicly traded securities held for more than one year can unlock additional funds for charity in two ways.
First, you potentially eliminate the capital gains tax you would incur if you sold the assets yourself and donated the proceeds, which may increase the amount available for charity by up to 20%. Second, you may claim a fair market value charitable deduction for the tax year in which the gift is made and may choose to pass on that savings in the form of more giving.
Bunching Charitable Gifting Strategies
Bunching charitable gifts is a tax-efficient strategy where donors combine multiple years’ worth of charitable contributions into a single tax year. By concentrating gifts, taxpayers are more likely to exceed the standard deduction and itemize, capturing a larger tax benefit. In alternating years, they can then take the standard deduction.
Changes in Gifting Starting in 2026
Charitable Contribution Deduction: The bill creates a charitable contribution deduction for taxpayers who do not elect to itemize, allowing nonitemizers to claim a deduction of up to $1,000 for single filers or $2,000 for married taxpayers filing jointly for certain charitable contributions. For itemizers, the bill imposes a 0.5% floor on the charitable contribution deduction: The amount of an individual’s charitable contributions for a tax year is reduced by 0.5% of the taxpayer’s contribution base for the tax year. For corporations, the floor will be 1% of the corporation’s taxable income, and the charitable contribution deduction cannot exceed the current 10%-of-taxable-income limit.
Talk to your Churchill advisor for more details on how to maximize charitable giving and work with your tax preparer for tax planning and final tax advice.
Happy Holidays to you and your family!
Director of Financial Planning: Scott Perkins, MsTax, MBA, CFP®
Reach out to a Churchill advisor at (877) 937-7110 or [email protected] to discuss how to maximize your charitable giving.
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