Just before the end of 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), which brought sweeping changes to the tax code.
While much of the attention focused on the corporate tax rate drop from 35% to 21% and reductions in individual tax brackets, other provisions have reshaped how everyday taxpayers approach deductions, including charitable giving. [1] Now, as we approach the sunset of key TCJA provisions in 2026, many of the changes that affect individuals will come into sharper focus. For residents of high-tax states like New Jersey, New York, and California, the impact may be especially pronounced.
In addition, the One Big Beautiful Bill Act (OBBBA), enacted in July 2025, introduces further deduction-and-credit changes, including modifications to charitable deduction rules and the state/local tax (SALT) deduction cap.
For 2025, the standard deduction which reduces your Adjusted Gross Income (AGI) to calculate taxable income stands at approximately $31,500 for married filing jointly, $15,750 for single filers, and $23,625 for heads of households.
Charitable donations remain deductible for those who itemize, but for the majority who take the standard deduction, the tax incentive to give has diminished. And starting in 2026, new legislation will introduce a 0.5% AGI floor for charitable deductions, meaning your giving must exceed that threshold before it counts. For many, this change will make 2025 the last year to maximize deductions without added considerations.
For clients age 70½ or older, Qualified Charitable Distributions (QCDs) may offer a powerful workaround—whether or not you are subject to Required Minimum Distributions (RMDs) yet. In 2025, a QCD allows you to direct up to $108,000 annually from your IRA to a qualified charity, excluding that amount from taxable income even if you take the standard deduction. While RMDs begin at age 73 for those born before 1960 and at age 75 for those born in 1960 or later, QCDs remain available starting at age 70½. The QCD limit for 2026 will be $115,000 per individual.
In addition, the IRS permits individuals to make a one-time QCD to a split-interest entity. This lifetime election allows a donor to contribute up to $54,000 (in 2025) to establish either a Charitable Remainder Unitrust (CRUT), a Charitable Remainder Annuity Trust (CRAT), or a Charitable Gift Annuity (CGA). This amount is adjusted annually by the IRS.
Here’s how it works: If your RMD for 2025 is $50,000 and you send $10,000 directly to a charity via a QCD, you’ll only be taxed on $40,000. This not only lowers your taxable income but may also reduce the impact on income-related items like Medicare premiums and Social Security taxation.
While QCDs have been around for years, they may be more relevant than ever. And the process has become easier: many custodians now allow check-writing directly from retirement accounts, removing the need for cumbersome paperwork or phone calls.
With the charitable deduction floor and other TCJA expirations looming in 2026, 2025 may present a unique opportunity to maximize your philanthropic impact and tax efficiency. Strategies like bundling donations into a donor-advised fund (DAF), gifting appreciated assets, or leveraging QCDs can help you lock in higher deduction limits before thresholds tighten.
If you typically give because of both personal connection and tax benefit, this is the year to be strategic. Acting now can help preserve the full value of your generosity.
If you’re considering charitable contributions, now is the time to act. Your advisor can help you evaluate your options and implement a strategy that aligns with your values and financial goals—while taking full advantage of current tax rules.
[1] https://taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-business-taxes
Sources:
https://www.fidelity.com/retirement-ira/required-minimum-distributions-qcds
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