Year-End Planning Insight: Why It May Pay to Give in 2025

As we approach year-end, Bob and I wanted to share a planning opportunity that’s becoming a key conversation across our client base. Several provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are scheduled to change beginning in 2026, and many of those adjustments will reduce the tax benefits of charitable giving, particularly for high-net-worth families who itemize.

If philanthropy is part of your financial plan, this creates a unique window of opportunity between now and December 31, 2025. In short, charitable gifts made under today’s rules are likely to deliver more tax value than those made once the new limits are in place.

Two of the most significant updates scheduled to take effect in 2026 are:

  • A new 0.5% AGI floor. The first 0.5% of your adjusted gross income (AGI) contributed to charity will no longer be deductible. 
  • A 35¢ cap on deduction value. For those in the top bracket, the value of itemized deductions, including charitable gifts, will be capped at 35 cents on the dollar, rather than the current 37 cents. 

While those numbers may sound small, the effect compounds quickly for families who give consistently and at meaningful levels. Even routine annual gifts could generate less tax benefit, and a portion of your giving may no longer be deductible at all.

We’re already helping many of you explore ways to get ahead of these changes. Some of the most effective strategies we’re seeing include:

  • Accelerating multi-year giving. Families who typically give each year are choosing to “pull forward” future gifts into 2025 — locking in the current rules while also simplifying their planning for 2026 and beyond. 
  • Front-loading donor-advised funds (DAFs). We’ve been coordinating with several clients to establish or top up DAFs this year. This approach captures the full deduction in 2025, while allowing you to distribute funds thoughtfully over time. 
  • Coordinating with tax advisors. We’re running side-by-side projections with clients’ CPAs to quantify the potential tax delta between gifting now and gifting later, and in many cases, the difference is material. 

For many of you, charitable giving is about more than tax efficiency, it’s part of how you express your values and legacy. But when tax law changes shift the leverage of those gifts, it’s worth re-evaluating the timing. The next 10 weeks represent a final window to make gifts under today’s more favorable rules and doing so could materially increase the impact of your philanthropy.

We’d be happy to model the potential difference for you and work with your CPA to refine the right approach. If charitable giving is part of your strategy, now is the time to revisit your plan before the December 31 deadline.

Further Reading:

Warm regards,

The Pacific Group – Oppenheimer & Co. Inc.

 

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