The Year-End Giving Playbook: Maximize Your Charitable Tax Deductions Before December 31st

On December 29th last year, a retired executive called our office in a panic.

She'd sold her business earlier in the year for a significant gain. Her accountant had just delivered the news: she owed $340,000 in federal taxes. Was there anything she could do?

"You're passionate about education," I asked. "Have you considered a donor-advised fund?"

By December 31st, she had contributed $500,000 in appreciated stock to a donor-advised fund. The result: a $185,000 reduction in her tax bill, zero capital gains tax on the stock appreciation, and a charitable fund she could distribute to schools over the next decade.

She still had the same charitable intent she'd always had. She just executed it strategically.

If you're looking to maximize your charitable impact while optimizing your tax situation before December 31st, this guide is for you.

The Charitable Deduction Basics

Before diving into strategies, let's review how charitable deductions work in 2025:

Itemizing requirement: You must itemize deductions to claim charitable contributions. With the standard deduction at $14,600 (single) or $29,200 (married filing jointly), you need significant deductions to benefit.

AGI limitations:

• Cash contributions: Up to 60% of adjusted gross income (AGI)
• Appreciated property: Up to 30% of AGI
• Private foundations: Up to 30% of AGI (20% for appreciated property)

Carryforward: Contributions exceeding AGI limits can be carried forward for up to five years.

Substantiation requirements:

• Under $250: Cancelled check, receipt, or reliable written record
• $250+: Written acknowledgment from the charity before filing
• $500+: Form 8283 required for non-cash contributions
• $5,000+: Qualified appraisal required for non-cash contributions (except publicly traded securities)

Strategy #1: Bunching Contributions

If your annual giving doesn't push you over the standard deduction threshold, consider "bunching" multiple years of giving into one year.

How it works:

Instead of giving $15,000 annually (which, combined with other deductions, might not exceed the standard deduction), give $45,000 in one year and nothing for the next two.

Example:

• Married couple with $10,000 in state/local taxes and $15,000 in annual giving
• Total itemized deductions: $25,000
• Standard deduction: $29,200
• Without bunching: Take standard deduction every year, get no tax benefit from giving

With bunching (every third year):

• Year 1: $10,000 SALT + $45,000 contributions = $55,000 itemized deductions
• Years 2-3: Take standard deduction

Result: $25,800 in additional deductions over the standard deduction, worth $6,450+ in tax savings (at 25% bracket).

Strategy #2: Donor-Advised Funds (DAFs)

A donor-advised fund is like a charitable savings account. You contribute now (and take the deduction now), but distribute to charities over time.

Benefits:

• Immediate tax deduction in high-income years
• Time to research and select recipient charities
• Simplified recordkeeping (one acknowledgment for the DAF contribution)
• Can contribute appreciated assets (avoiding capital gains)
• Assets grow tax-free until distributed

Perfect for:

• Business owners with a liquidity event
• Executives receiving large bonuses
• Anyone wanting to "pre-fund" future giving
• Those who want the deduction now but need time to decide which charities to support

Important notes:

• Contributions are irrevocable (you can't get the money back)
• Grants must go to qualified 501(c)(3) organizations
• You advise on distributions, but the DAF sponsor has final say (though recommendations are almost always followed)
• Minimum contribution amounts vary by sponsor ($5,000-$25,000 typically)

Strategy #3: Appreciated Stock Donations

Donating appreciated securities directly to charity (or a DAF) provides a double tax benefit:

1. Deduction for full fair market value
2. No capital gains tax on the appreciation

Example: You purchased stock for $20,000 that's now worth $50,000.

Option A - Sell and donate cash:

• Sell stock: $30,000 gain × 23.8% tax = $7,140 in taxes
• Donate $42,860 after-tax proceeds
• Deduction: $42,860

Option B - Donate stock directly:

• No capital gains tax
• Donate full $50,000 in value
• Deduction: $50,000

Donating the stock directly provides $7,140 more to charity AND $7,140 higher deduction—a win-win-win.

Requirements:

• Stock must be held more than one year (for full fair market value deduction)
• Must be publicly traded (private stock has different rules)
• Charity must be able to receive stock (most large organizations can)

Strategy #4: Qualified Charitable Distributions (QCDs)

If you're 70½ or older, you can donate up to $105,000 directly from your IRA to charity. This is called a Qualified Charitable Distribution.

Benefits:

• Counts toward your Required Minimum Distribution (RMD)
• Excluded from taxable income entirely
• Works even if you take the standard deduction
• Reduces AGI (which can reduce Medicare premiums, Social Security taxation, etc.)

Example: You have a $100,000 RMD and typically give $20,000 to charity.

Without QCD:

• Take $100,000 RMD (fully taxable)
• Donate $20,000 (deduction only if itemizing)

With QCD:

• Transfer $20,000 directly from IRA to charity (not taxable)
• Take $80,000 RMD (taxable)
• Result: $20,000 less in taxable income, regardless of itemizing

Requirements:

• Must be 70½ or older
• Funds must go directly from IRA to charity (not to you first)
• Must be a qualified charity (not a DAF or private foundation)
• Must get proper acknowledgment

Strategy #5: Charitable Remainder Trusts (CRTs)

For those with significant appreciated assets seeking income, charitable remainder trusts offer unique benefits.

How it works:

1. Transfer appreciated assets to an irrevocable trust
2. Receive annual income payments (typically 5-8% of trust value)
3. Remaining assets go to charity at trust termination (or your death)

Benefits:

• Immediate partial charitable deduction
• Bypass capital gains on appreciated assets
• Receive income stream for life (or a term of years)
• Diversify concentrated positions without triggering gains

Best for:

• Those with highly appreciated assets seeking income
• Planned giving as part of estate planning
• Those who want to support charity but also need cash flow

Considerations:

• Legal and administrative costs to establish
• Irrevocable—you can't get the principal back
• Complex tax rules—professional guidance essential
• Minimum 10% remainder value requirement

Last-Minute Giving Checklist

With December 31st approaching, here's what you can still accomplish:

By December 31st:

• [ ] Credit card donations (date of charge counts, not payment)
• [ ] Check donations (postmarked by 12/31)
• [ ] Stock transfers (initiated by 12/28 for safe processing)
• [ ] DAF contributions (check sponsor deadlines—some cut off early)
• [ ] QCDs from IRAs (custodian processing time varies)

Documentation needed:

• [ ] Written acknowledgment for donations $250+
• [ ] Description and valuation for non-cash items
• [ ] Basis documentation for appreciated property
• [ ] Form 8283 for non-cash donations over $500

What Doesn't Qualify

Don't assume every "donation" counts:

Not deductible:

• Contributions to individuals (including GoFundMe for a person)
• Political contributions
• Raffle tickets, lottery tickets, or gambling proceeds
• Value of your time or services
• "Donations" where you receive equivalent value (that's a purchase)

Partially deductible:

• Charity event tickets: Only the amount exceeding fair market value
• Charity auctions: Only the amount exceeding item value

Planning for 2026

While you're maximizing 2025 deductions, start thinking about next year:

Consider:

• Setting up a DAF for flexibility
• Reviewing estate plans for charitable provisions
• Establishing a giving budget aligned with tax planning
• Identifying appreciated securities for future donations
• Coordinating with your CPA on overall tax strategy

For non-profit leaders: Your donors are thinking about these strategies right now. Make it easy for them to give appreciated stock. Mention QCDs to older donors. Provide year-end acknowledgments promptly.

The Bottom Line

Strategic charitable giving isn't about gaming the system—it's about maximizing your impact. Every dollar saved in taxes through smart planning is a dollar that can go to causes you care about (either to the same charity or others).

The executive who opened this article? She's now a board member at a local education foundation. Her donor-advised fund has distributed over $200,000 to schools across her region. And she tells everyone who will listen: "My CPA showed me how to give more, not less. I just had to do it strategically."

Need help with year-end tax planning or charitable giving strategies? Our CPA team helps individuals and families maximize their charitable impact while minimizing tax burden. Schedule a consultation before December 31st.

This article provides general information about charitable giving tax strategies. Tax laws are complex and individual situations vary significantly. Consult with a qualified CPA or tax attorney before implementing any strategy.