Giving to charity is rewarding in its own right — but with the right tax planning, it can also reduce your federal income taxes.

The challenge is that many taxpayers don’t receive any meaningful tax benefit from their charitable donations because of how today’s tax rules work. Fortunately, there are several strategies that can help you maximize both your charitable impact and your tax savings.

Whether you’re donating cash, appreciated investments, or taking distributions from an IRA, understanding the rules can make a significant difference.

Why Many Charitable Donations Don’t Produce a Tax Deduction

Most taxpayers claim the standard deduction rather than itemizing deductions.

For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly, per the IRS’s official inflation-adjusted figures.

To receive a tax benefit from charitable contributions through itemizing, your total itemized deductions — including state and local taxes (SALT), mortgage interest, charitable contributions, and certain other deductible expenses — must exceed your standard deduction.

The good news is that recent tax law changes have made this easier for some taxpayers. Under the One Big Beautiful Bill Act (OBBBA), the federal deduction for state and local taxes (SALT) increased dramatically — from the previous $10,000 limit to $40,400 in 2026, with modest annual increases through 2029. Higher-income taxpayers are subject to a phaseout, but the expanded SALT deduction allows many more homeowners to itemize than under prior law.

Even so, many taxpayers still won’t itemize every year, making charitable planning more important than ever.

Strategy 1: Bunch Multiple Years of Donations Together

One of the simplest tax-saving strategies is bunching your charitable contributions. Instead of donating every year, you combine two or three years’ worth of gifts into a single tax year. Doing so may allow your itemized deductions to exceed the standard deduction, generating a larger tax benefit.

Example: Suppose a married couple normally donates $8,000 annually to charity, plus $18,000 of mortgage interest and SALT deductions. Their total itemized deductions equal $26,000. If their standard deduction is $32,200, they receive no additional tax benefit from their charitable giving.

Instead, they could donate $24,000 every third year while making no charitable gifts during the other two years. In the contribution year, their deductions become $18,000 of other deductions plus $24,000 of charitable gifts — a total of $42,000. Now they receive a meaningful tax deduction while giving exactly the same amount over time.

This strategy often works best when combined with a Donor-Advised Fund.

Strategy 2: Use a Donor-Advised Fund (DAF)

A Donor-Advised Fund (DAF) allows you to separate when you receive the tax deduction from when the charities receive the money. You contribute cash or appreciated assets into the DAF, receive the deduction immediately, and then recommend grants to charities whenever you’d like.

This provides several benefits: it’s ideal for bunching multiple years of donations, it allows investments to grow tax-free while waiting to be distributed, it simplifies recordkeeping, it enables anonymous giving if desired, and it accepts appreciated securities and other assets.

For many families, a DAF provides the flexibility to make tax decisions based on income while continuing to support charities on a consistent schedule.

Strategy 3: Donate Appreciated Investments Instead of Cash

If you own stocks, ETFs, mutual funds, or other investments that have appreciated significantly and you’ve held them for more than one year, consider donating the investment directly. Doing so provides two tax benefits: you receive a charitable deduction for the asset’s fair market value (subject to applicable limits), and you avoid paying capital gains tax on the appreciation.

Example: You purchased stock for $5,000 that’s now worth $20,000. If you sell the stock first, you recognize a $15,000 capital gain, pay capital gains tax on it, and donate what’s left. Instead, by donating the stock directly, you avoid the capital gains tax, the charity receives the full value, and you may receive a deduction based on the stock’s current fair market value.

For highly appreciated investments, this is often one of the most tax-efficient ways to give.

Strategy 4: Qualified Charitable Distributions (QCDs)

If you’re age 70½ or older and own a traditional IRA, a Qualified Charitable Distribution (QCD) may be one of the most effective charitable planning strategies available. A QCD allows you to transfer up to the annual IRS limit directly from your IRA to a qualified charity.

Unlike a normal IRA withdrawal, the distribution is excluded from taxable income, it can satisfy Required Minimum Distributions (RMDs) when applicable, it may reduce Medicare premium surcharges, it may lower the taxation of Social Security benefits, and it reduces Adjusted Gross Income (AGI), which can improve eligibility for other tax benefits.

For taxpayers who normally claim the standard deduction, a QCD is frequently more valuable than taking a taxable IRA distribution and writing a personal check to charity.

New Rules Beginning in 2026

Recent tax law changes introduced two important charitable giving provisions.

A charitable deduction for many non-itemizers: Beginning in 2026, taxpayers who claim the standard deduction may still qualify for a limited deduction for cash contributions made to qualifying public charities — up to $1,000 for single filers and $2,000 for married couples filing jointly. This provides a federal tax benefit for many donors who previously received none. The deduction applies only to qualifying cash gifts; donor-advised fund contributions and most private foundation gifts don’t count.

A new deduction threshold for itemizers: Beginning in 2026, taxpayers who itemize generally may deduct charitable contributions only to the extent they exceed 0.5% of Adjusted Gross Income (AGI). For example, if your AGI is $200,000, the first $1,000 of charitable contributions generally won’t produce a deduction, while amounts above that threshold may still qualify.

Although this new rule slightly reduces the tax benefit of charitable giving for some taxpayers, the planning strategies discussed above — especially bunching, DAFs, appreciated asset donations, and QCDs — remain highly effective.

Frequently Asked Questions

Can I deduct volunteer time?
No. The value of your time or services isn’t deductible. However, you may deduct certain unreimbursed expenses incurred while volunteering, including charitable mileage at the IRS charitable mileage rate and other qualifying out-of-pocket costs.

What records should I keep?
Generally: for gifts under $250, keep a bank record or receipt; for $250 or more, keep a written acknowledgment from the charity; for non-cash donations over $500, file Form 8283; and for non-cash donations over $5,000 (other than publicly traded securities), a qualified appraisal is generally required. Maintaining proper documentation is essential if the IRS ever questions your deduction.

Are GoFundMe donations deductible?
Usually not. Only donations made to qualified IRS-recognized 501(c)(3) organizations are generally deductible. Gifts made directly to individuals — even for legitimate hardships — typically don’t qualify.

Can my business deduct charitable contributions?
It depends on your business structure. C corporations generally deduct charitable contributions at the corporate level, subject to applicable limitations. S corporations and partnerships pass charitable contributions through to the owners. Sole proprietors generally deduct charitable contributions on Schedule A, not as a business expense on Schedule C. The proper treatment depends on the type of entity and your individual tax situation.

Final Thoughts

Charitable giving should first reflect your values — but with thoughtful planning, it can also become a powerful tax-saving strategy. Whether you’re considering bunching donations, using a Donor-Advised Fund, donating appreciated investments, or making Qualified Charitable Distributions, the right strategy depends on your income, assets, and long-term financial goals.

If you’d like to apply this to your situation, the team at Molen & Associates is here to help. Schedule a consultation at molentax.com.