A sweeping federal tax law championed under President Donald Trump is still changing how Americans give to charity at the end of the year. As donors plan December contributions, advisers say the rules can affect whether gifts lower taxes and how nonprofits should plan for donations. The changes matter now because most individual provisions are set to expire after 2025 unless Congress extends them.
The law increased the standard deduction, capped state and local tax write-offs, and adjusted limits on cash donations. Those shifts reduced the number of people who itemize deductions, reshaping the incentives for charitable giving. For many households, strategy now makes the difference between a tax benefit and none at all.
President Donald Trump described it as a “big beautiful bill” that would reshape the tax code and simplify filing.
What Changed and Why It Matters
The law, passed in late 2017, doubled the standard deduction and limited certain itemized deductions. Since charitable deductions generally apply only to itemizers, far fewer taxpayers now receive a tax break for donations.
IRS data show the share of taxpayers who itemize fell sharply after the law took effect. Charitable giving dipped in 2018 and then stabilized, but the pattern shifted: higher-income households now account for a larger share of deductible gifts, and timing strategies have become more common.
Key features still in effect include a $10,000 cap on state and local tax deductions and an enlarged standard deduction. The higher ceiling for cash gifts to public charities, raised to 60% of adjusted gross income, remains relevant to donors capable of large cash contributions.
How Donors Are Adapting
Tax professionals say donors are using targeted tactics to make gifts count. The most common strategies include:
- Bunching two or more years of donations into a single year to itemize that year, then taking the standard deduction in the next year.
- Contributing appreciated stocks or funds instead of cash to avoid capital gains and still deduct the fair market value if itemizing.
- Using donor-advised funds to make a large, deductible gift now and grant money to charities over time.
- For people age 70½ and older, making qualified charitable distributions from IRAs to reduce taxable income.
These tactics can restore a tax benefit for many households that otherwise rely on the standard deduction. The timing of medical expenses, mortgage interest, and property taxes also affects whether donors can itemize in a specific year.
Impact on Nonprofits
Nonprofits report more year-end concentration and larger gifts from fewer donors, complicating cash flow. Organizations now emphasize tax-efficient giving options in outreach, including appreciated securities and donor-advised funds. Some charities have expanded planned giving efforts to offset volatility in annual donations.
Small and mid-size nonprofits, which depend on broad donor bases, face added pressure. They are responding with clearer impact reporting, recurring-gift programs, and prompts that explain non-cash giving. Fundraisers also schedule appeals earlier to reach donors planning bunching strategies.
Planning Considerations Before December 31
Donors who want a deduction this year should review whether they can itemize. If not, they can consider bunching or using donor-advised funds to surpass the standard deduction threshold. Those with highly appreciated assets can often improve results by gifting securities rather than cash.
Households near retirement may find that IRA charitable transfers reduce taxable income and Medicare surcharges while meeting giving goals. Larger donors should review adjusted gross income limits and the need for proper appraisals when giving complex assets.
What to Watch Next
Many individual tax provisions expire after 2025. If Congress lets the current rules lapse, the standard deduction could shrink and more people would itemize again, likely shifting charitable incentives once more. Donors and nonprofits should monitor legislative talks in 2025, when tax writers are expected to debate extensions or revisions.
For now, careful planning remains the best tool. The law changed how and when donations deliver tax benefits, but it did not change why people give. Donors who align their gifts with the rules can still support causes and manage their tax bills.
Bottom line: Know whether you can itemize this year, consider bunching and appreciated assets, and keep an eye on 2025. Strategy can preserve tax value while sustaining vital charitable work.
