Tax Policy Updates That May Impact Giving Strategies

We all know that a new administration brings lots of potential change. So, what is going on that you need to know about to serve your charitable clients? The Tax Cuts and Jobs Act (TCJA) of 2017 remains at the forefront of our attention. This legislation significantly altered the charitable giving landscape with changes set to expire at the end of 2025—creating both challenges and opportunities for your clients’ charitable planning.

You may remember that the TCJA lowered individual income tax rates, which decreased the tax advantages of charitable donations. Additionally, the nearly doubled standard deduction (in 2025, $15,000 for single filers and $30,000 for joint filers) drastically reduced the number of taxpayers who itemized their deductions. Research indicates that charitable giving in the U.S. fell by approximately $20 billion in 2018, the first year under these new provisions.

The TCJA also roughly doubled the estate tax exemption, now at $13.99 million per person for 2025. This higher threshold has weakened tax-motivated charitable giving among wealthy clients, as fewer estates face taxation. Many advisors now work with a smaller client base for whom charitable bequests effectively reduce taxable estates.

While tax policy certainly influences giving behaviors, research consistently shows that most donors are motivated by factors beyond tax savings. Many give out of a sense of duty, a desire to address inequality, a passion for specific causes, religious convictions, or commitment to supporting those in need. Your clients likely experience emotional benefits from their philanthropy and appreciate making a difference in our community. Though tax benefits factor into decision-making, they typically remain secondary considerations—after all, donors always finish with less money after making a gift, indicating that financial gain isn’t their primary motivation.

Though much remains uncertain, we know that 2025 will bring changes that affect charitable planning. While TCJA provisions sunset at year-end, it’s too soon to offer definitive advice. Consider these three potential scenarios:

1. If Congress extends current TCJA provisions, we’ll likely see existing patterns of charitable giving, with potentially a reduction in overall donations due to the higher standard deduction and estate tax incentives relevant only to ultra-wealthy clients.
2. If TCJA provisions expire without replacement, charitable giving could increase as more taxpayers return to itemizing deductions and face higher marginal tax rates. A lower estate tax exemption would incentivize more clients to pursue charitable gifts that reduce taxable estates.
3. New legislation might introduce different charitable giving incentives. The proposed Charitable Act, for instance, would create a universal charitable deduction, potentially encouraging giving across all income levels.

We’re monitoring these developments closely and will keep you informed. Meanwhile, I invite you to contact me directly to discuss specific client situations. Our team at the Foundation stands ready to help structure charitable plans that fulfill your clients’ philanthropic aspirations—regardless of the tax environment.

For more information about how we can help you serve your philanthropic clients, contact Monika Collins, mcollins@delcofoundation.org. We’re always available to answer your questions about philanthropy or to schedule a personal consultation with you and your clients – all at no cost.