With only a few months left in 2025, it is important to evaluate your philanthropy sooner rather than later. Recently passed tax laws may throw a curveball into the financial planning strategies you’ve set in motion with your advisors.
Here are six tips to help you and your attorney, CPA, and financial advisor evaluate whether adjustments to your charitable plan might be in order. Of course, the team at the Foundation would be honored to join your meeting for the charitable giving conversation. There are so many ways we can help!
Check out the new estate tax exemption.
The One Big Beautiful Bill Act (OBBBA) extended or “made permanent” many favorable tax provisions, notably the elevated estate tax exemption. In technical terms, under the new law, the 2025 estate tax exemption is $13.99 million for single filers and $27.98 million married filing jointly. In 2026, these numbers increase to $15 million and $30 million respectively. You may recall that the higher exemption was originally scheduled to sunset at the end of this year, which would have caused a lot more estates to be subject to tax. This, in turn, prompted many people to lean on charitable gifts in their wills and trusts to blunt the impact of estate taxes.
Keep planning!
If you are a high net worth individual, even though the estate tax exemption is staying high, this is no time to become complacent. Although no one knows what future tax legislation might look like, we all know that there will be tax legislation in the future. Today’s tax advantages will not be tomorrow’s tax advantages. Continue to talk with the Foundation and your advisors about your charitable giving plans so you are ready to make adjustments when the laws change again.
Consider not making a change.
Above all, remember that financial motivations are not the top reason people support charities. That is certainly our experience at the Foundation. So, if you were among the people who adjusted estate plans in anticipation of the lower estate tax exemption, consider retaining the larger bequest to your fund at the community foundation or other charities. You’ll be doing a lot of good!
2025 is important if you itemize deductions on your income tax return.
If you itemize deductions on your income tax return, 2025 presents a window of opportunity! This is because the OBBBA increases the standard deduction in 2025. This is also because your itemized charitable deductions will be subject to a “floor” and cap starting in 2026. A technique called “bunching” could allow you to make big contributions to your donor-advised fund at the community foundation in 2025 so that you can benefit from itemizing your deductions. In turn, over the coming years, you can use your donor-advised fund to support your favorite charities.
Stick to the basics.
Sure, a lot is changing, but a lot isn’t! Appreciated stock is still likely to be a much more tax-savvy gift to charity than cash, and it’s important to keep this top of mind. In addition, IRAs remain a powerful charitable planning tool. For instance, when you name a fund at the Foundation as the beneficiary of an IRA, the gift avoids estate tax and income tax, both of which can hit your heirs hard.
Know the opportunities if you are 70 ½ or older.
If you are 70 ½ or older, the Qualified Charitable Distribution (“QCD”) is a great way to transfer up to $108,000 (2025’s per taxpayer limit) income-tax free to a qualified charity, including some types of funds at the community foundation.
Please reach out to the Foundation team. We’re honored to be your first call on all things charitable giving!
