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October 14, 2025
For years, the rules surrounding charitable giving have remained steadfast. But starting in 2025, upcoming tax law changes could impact not only how much you give, but also when and how you give.
If you’re a high earner, chances are you’ve built a career that does more than just support your family: you create jobs, contribute to your community and reflect your values. For many, that same sense of purpose extends beyond work to supporting causes that matter deeply.
A Donor-Advised Fund (DAF) can be a thoughtful way to give. It provides upfront tax benefits while giving you the flexibility to decide how and when your donations are distributed. With changes on the horizon, now may be a good time to re-examine your donation strategy. The steps you take today can determine both the impact of your generosity and your long-term financial plan. [1]
What is a donor-advised fund and why does it matter now?
If you’re unfamiliar with Donor-Advised Funds (DAFs), now is a good time to get acquainted, especially with the new tax rules on the horizon. From 2026, the deductibility of contributions to charities will be reduced for those in the highest tax bracket. If giving back is already part of your values, it may make sense to increase your donations in 2025 to maximize current tax benefits.
A DAF is a charitable investment account set up to support the organizations you care about. You can contribute cash, stocks, mutual funds, and even complex assets like private business interests or cryptocurrency. In return, you get an immediate tax deduction. Plus, the assets in your DAF can grow tax-free until you’re ready to make grants.
One of the biggest advantages of a DAF is the flexibility it offers. The sponsoring organization handles the administrative work so you can focus on aligning your donations with your values while maintaining control over how and when your dollars are distributed.
While there are some potential pitfalls to consider, a DAF allows you to consolidate contributions into one tax year, allowing for a larger deduction, while spreading the actual donations over time. That’s one reason why 2025 could be a particularly strategic year to rethink your giving plan. [2]
What the 2026 tax law changes mean for you
As you may know, the One Big Beautiful Bill Act (OBBBA) was signed into law this year. It retains many features of the 2017 Tax Cuts and Jobs Act (TCJA) while introducing significant updates that will have a significant impact on charitable giving beginning in 2026. For donors, especially high-income donors, these changes bring both opportunities and challenges, making timing an important part of any donation strategy. [3]
One of the most notable updates is a cap on charitable deductions for people in the highest tax bracket. From 2026, itemized deductions will be limited to 35%, a decrease from 37%. That means top earners will no longer receive the full value of their current marginal rate. For example, a $1,000 donation in 2025 would result in a $370 deduction; in 2026, that same gift would yield only $350.
Additionally, a new “floor” requires charitable contributions to exceed 0.5% of adjusted gross income (AGI) before they can be deducted. So if your AGI is $600,000, only donations above $3,000 are deductible.
Taken together, these changes make 2025 an especially strategic year to consider larger or accelerated charitable contributions – especially as higher deductions remain available.
And that’s just the beginning. The OBBBA also:
- Reintroduces above-the-line deductions for non-itemizers
- Expands the SALT deduction
- Makes permanent the ability to deduct up to 60% of AGI for cash donations to public charities
- Increases the estate and gift tax exemption to $15 million by 2026, creating additional opportunities for lifelong charitable planning
The end result? Giving strategies that worked in years past may not yield the same results in the future. With deductibility on the horizon, 2025 could be a good time to rethink your approach, possibly by consolidating gifts or using a Donor-Advised Fund (DAF) to your advantage.
Will you contribute to a DAF this year?
As you think about your charitable giving, 2025 presents unique opportunities.
With new tax rules designed to reduce the deductibility of charitable contributions in 2026, this year may be the right time to take action. For some, that could mean accelerating the number of donations, combining multiple years of donations (a strategy often called “bundling”), or using a Donor-Advised Fund (DAF) to secure current deduction rates while maintaining flexibility over when and how to give.
Another powerful option is donating highly valued stocks. By contributing shares directly, you avoid paying capital gains tax on the sale and still receive the full value of the contribution when it is made.
At Envision Wealth Planners, we work closely with clients to integrate philanthropy into a broader financial plan. Our goal is to help you maximize both the tax efficiency and long-term impact of your donations, while avoiding common missteps. It’s not just about numbers and deductions. It’s about aligning your resources with your values in a way that gives you more freedom and supports the goals you care about.
If charitable giving is part of your 2025 plans, now is the time to start the conversation. We can help you tackle this with clarity and purpose, making the most of the current tax landscape while building a lasting legacy for the future.
Sources:
- https://www.irs.gov/charities-non-profits/charitable-organizations/donor-advised-funds
- https://www.investopedia.com/terms/d/donoradvisedfund.asp
- https://bipartisanpolicy.org/explainer/the-one-big-beautiful-bill-acts-changes-to-charitable-deductions/
This article was originally published here and is republished on Wealthtender with permission.
About the author
Sean Gerlin, CFP®, CPWA®, ChFC®, CLU® Creating clarity from complexity
Sean Gerlin, CFP®, CPWA®, ChFC®, CLU® | Imagine wealth planners
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