Charitable Giving Strategies for Every Age and Budget

BY AMY ARTIGA

This is a season where we celebrate the greatest gift ever given, Jesus Christ, and doing so often inspires us to respond with our own generosity. While we give because He first gave to us—and not for the tax benefits—it’s still nice to receive some tax benefits if possible. Here is what you need to know about charitable giving and the tax code.

New 2026 Provisions

Most people only receive a tax benefit for their charitable giving through itemized deductions on Schedule A for all of their eligible donations. The One Big Beautiful Bill Act, which was passed in July, made some small changes to that.

Starting in 2026, married filers can deduct up to $2,000 of charitable donations ($1,000 for single filers) while claiming the standard deduction. Also starting in 2026, those who itemize their deductions will be subject to a 0.5% AGI floor for their charitable deductions. That means a person with an AGI of $100,000 will not be able to deduct the first $500 of their charitable giving.

Donor-Advised Funds (DAFs)

A donor-advised fund is similar to a savings account for charitable giving. You donate money to the account and then make distributions from the account to qualified charities. When you put money into a DAF, you are making a completed charitable gift. That means the gift is irrevocable and becomes eligible for tax deduction in the year given.

Bunching Donations

A DAF is a tool often used to implement a bunching giving strategy. With this strategy, you contribute two or more years’ worth of charitable giving at one time in order to get a large tax deduction. Then you make your charitable donations from your DAF over the next two years while claiming the standard deduction in the second year. Some people can save up to several thousand dollars in taxes by following this strategy.

Appreciated Securities

Another way to receive a tax benefit for your charitable giving is by donating appreciated securities that you have held for more than a year, rather than cash. When you sell securities to donate the proceeds, then you must pay taxes on the difference between what you bought them for and what you sold them for. However, if you donate the securities directly to charity (which can also be a DAF), you receive a deduction for the full current market value of the securities, but neither you nor the charity has to pay taxes on the valuation growth.

Qualified Charitable Distributions (QCDs)

If you are over age 70 ½, then you have the opportunity to make Qualified Charitable Distributions. A QCD is a gift made directly from a traditional IRA account to a qualified charity. If you withdraw money out of your IRA directly and then make a donation, your IRA distribution is taxed as ordinary income. When the money goes directly from the IRA to the charity through a QCD, it is not counted as income to the donor, so you get an immediate tax benefit whether you itemize deductions or not. The amount of the QCD is counted toward your annual required minimum distribution.

Legacy Gifts

A final way to make charitable contributions that save on taxes is upon your passing. It is common to include your church or a nonprofit organization in your estate planning. When doing so, the best type of asset to leave to a charity is a tax-deferred account, such as a traditional IRA, 403(b), or 401(k). Those are the assets that your heirs have to pay the most taxes on, but charities do not have to pay any taxes when they receive those accounts.

Budget Line Item

Finally, I would like to encourage you to include a line item in your budget so that when needs arise, especially those of individuals and not qualified charities, you already have the funds set aside to help. Remember, the Good Samaritan was only able to do what he did (and end up with countless ministries and hospitals named after him 2,000 years later) because he had money on hand to help others.

When it comes to giving, it’s important to remember that we give as a response of gratitude for all He has given us. As you consider your charitable giving, don’t ask, “How much should I give?” Rather, ask the Lord, “How much should I keep?”

Amy Artiga is a Certified Financial Planner (CFP), a Certified Kingdom Advisor™, and author of the clergy personal finance blog PastorsWallet.com. Send questions for Amy to benefits@nazarene.org.