The 2017 Tax Cuts and Jobs Act roughly doubled the standard deduction and limited the state-and-local-tax deduction to $10,000. As a result, the percentage of households that itemize fell from about 30% to about 10%. For many of our clients, the charitable contribution that used to lower their federal tax bill no longer does — at least not in the year it's made.
That doesn't mean the tax code stopped rewarding charity. It means the strategy moved to three tools that most donors never think about.
1. "Bunching" several years of giving into one
If you'd give $10,000 per year to charity for the next three years, consider giving $30,000 this year and nothing the next two. In the big year, your itemized deductions may exceed the standard deduction; in the off years, you simply take the standard. Total tax bill: lower.
Bunching pairs naturally with a donor-advised fund:
- Contribute the bunched amount to the DAF in the high-deduction year. You take the deduction now.
- Recommend grants to your favorite charities over the following years on your normal schedule.
- The charities receive their usual annual support; you've moved the deduction.
2. Qualified Charitable Distributions (QCDs)
If you are 70½ or older, you can transfer up to $108,000 per year (the 2025 indexed limit) directly from your IRA to a qualified public charity. The amount:
- Does not appear in your adjusted gross income — even though you took it out of the IRA.
- Counts toward your required minimum distribution after age 73.
- Does not require itemizing — the tax benefit comes from the income exclusion, not a deduction.
QCDs are often the most tax-efficient way for retirees to give, because keeping income out of AGI also keeps it out of the formulas that drive Medicare IRMAA surcharges, Social Security taxation, and the Net Investment Income Tax.
QCDs and DAFs do not mix. You cannot use a QCD to fund a donor-advised fund. If both tools fit your situation, use the QCD for direct charity gifts and the DAF for bunched cash or appreciated stock contributions.
3. Gifting appreciated securities
If you've held a stock or mutual fund for more than a year and it has unrealized gains, give the shares directly — not cash. The charity sells the shares tax-free, you avoid the capital gains tax you would have owed, and (if you itemize) you deduct the full fair market value of the shares.
For donors who already give cash each year, replacing those checks with appreciated-share donations is often a no-cost upgrade. The donor gives the same amount, the charity receives the same amount, and the donor avoids the capital gains tax bill that would otherwise have come due when those shares were eventually sold.
Where to start
Most charitable strategy starts with a simple question: what is your typical annual giving, and over how many years is it consistent? From there, the three tools above almost always combine into a better plan than the default of "write a check at year-end."
