Winston Churchill once said that "it is more agreeable to have the power to give than to receive." As the year ends, many people think about giving to charity and how it fits into their overall financial picture. Smart planning for charitable giving can help you support causes you care about while also saving on taxes. The key question is not just whether to give, but how to give in ways that make the biggest difference.
This year is a good time to think about your charitable giving. New tax laws have changed some of the rules around donations. Also, any gifts you want to count for this tax year must be made by December 31. Learning about different ways to structure your charitable gifts can make giving an important part of your financial strategy.
American household wealth has grown to record levels
Americans gave $593 billion to charity in 2024, which was 6.3% more than in 2023, according to the National Philanthropic Trust.1 This shows that giving to charity is still important to many families. As the chart shows, household wealth (the total value of what families own) has grown steadily as the economy and stock market have grown. Higher incomes and wealth, along with changes in tax laws, have created new reasons to give.
Charitable giving also matters for estate planning (planning what happens to your assets when you pass away). Money left to charity is not taxed as part of your estate. This makes charitable gifts an efficient way to lower estate taxes while supporting causes you believe in. The combination of giving during your lifetime and leaving money to charity in your will can significantly reduce the tax burden on your heirs (the people who inherit your assets).
Most importantly, charitable giving can help create a lasting legacy and pass on your family values to future generations. For many families, giving to charity becomes a way to involve children and grandchildren in important conversations about what matters most. While the desire to give is simple, finding the best approach requires careful planning.
When and how you give matters
Recent tax law changes have affected charitable giving. One important change is that more people can now itemize their tax returns (list out specific deductions instead of taking a standard amount). This is because the limit on state and local tax deductions increased from $10,000 to $40,000. Since you can only deduct charitable gifts if you itemize, this makes charitable giving more valuable for tax planning.
Starting in 2026, there will be a new rule that only donations above 0.5% of your adjusted gross income (AGI, which is your total income minus certain deductions) will be tax deductible. For example, if your AGI is $200,000, only donations above $1,000 would be deductible.
One strategy to work around this is called "bunching." This means combining multiple years of giving into one tax year to exceed the minimum threshold. Another key decision is choosing which assets to donate. For example, donating stocks or other investments that have gone up in value offers three tax benefits: you avoid capital gains tax (the tax on profits from selling investments), you get a deduction on your income taxes, and you remove those assets from your taxable estate.
Different ways to give
There are several vehicles (methods) for charitable giving, and the right choice depends on your situation and goals:
Donor-advised funds (DAFs) work like charitable investment accounts. You put money in, get an immediate tax deduction, and then decide later which charities to give to. The money can be invested and grow tax-free while you decide. DAFs now hold over $250 billion in assets.1 They are simpler than other options and work well when you want to maximize deductions in a particular year.
Qualified charitable distributions (QCDs) are available if you are 70½ or older and have a traditional IRA (a type of retirement account). QCDs let you transfer up to $108,000 in 2025 directly from your IRA to charities. This counts toward your required minimum distribution (the amount you must withdraw each year) but is not counted as taxable income. QCDs provide tax benefits whether or not you itemize.
Charitable remainder trusts (CRTs) are another option. With a CRT, you transfer assets into a trust that pays you or other beneficiaries income for a set period, with the remaining amount going to charity. This can be especially useful for assets that have increased significantly in value.
For those with substantial assets and long-term giving goals, additional options include private foundations, charitable lead trusts, and other specialized vehicles. Working with a financial advisor can help determine which approach is best for you.
Making giving part of your overall plan
The most effective charitable planning connects giving with your broader financial strategy, including investment management, tax planning, retirement income, and estate planning. Involving children and grandchildren in charitable decisions also creates opportunities to discuss family values and what causes deserve support. These conversations can be among the most meaningful aspects of financial planning.
The bottom line? With year-end approaching and new tax rules in place, now is a good time to review your charitable giving strategy. Smart planning can help you maximize both your impact on causes you care about and your tax benefits.
1. https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.