4 Ways to Receive a Tax Deduction for Charitable Contributions in 2025 and 2026
As we move into the season of giving, many people are looking for ways to support charities while also receiving a tax benefit. Americans are incredibly generous — in 2024 alone, charitable donations totaled $592 billion, a 6% increase from the year before. In addition, Americans donated an estimated 4.1 billion hours of volunteer time.
What many people don’t realize is that how you give can make a big difference when it comes to taxes. Below are four tax-efficient ways to donate to charity in 2025 and 2026, along with key rules and planning considerations.
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1. Qualified Charitable Distributions (QCDs) from Retirement Accounts
One of the most tax-efficient ways to give — especially in retirement — is through a Qualified Charitable Distribution (QCD).
How QCDs Work
Available once you reach Required Minimum Distribution (RMD) age, currently 73
Allows you to donate directly from an IRA to a qualified charity
The donated amount counts toward your RMD but is excluded from taxable income
Example
If your RMD is $15,000 and you donate $5,000 directly to a charity via a QCD:
Only $10,000 is taxable income
The $5,000 donated is never taxed
Important Rules
The charity must be a 501(c)(3) organization
Funds must go directly from your IRA to the charity
You cannot receive the money first and then donate it
QCDs are reported on Form 1099-R, but not identified as QCDs — you or your tax preparer must report them correctly
⚠️ This is a common area where mistakes happen. If QCDs are reported incorrectly, you could accidentally pay tax on money that should be tax-free.
2. Cash Donations and Itemized Deductions
The most familiar way to donate is by making a cash contribution to a charity. However, the tax benefit depends on whether you itemize deductions.
Itemizing in 2025
You can deduct cash donations if your total itemized deductions exceed the standard deduction. Itemized deductions may include:
Mortgage interest
Medical expenses exceeding 7.5% of AGI
State and local taxes (SALT)
SALT Deduction Expansion
From 2025 through 2029, the SALT deduction cap increases:
From $10,000 to $40,000
This makes itemizing more feasible, especially in high-tax states
New Rule for 2026 and Beyond
Starting in 2026, even if you take the standard deduction:
Single filers may deduct up to $1,000
Married couples filing jointly may deduct up to $2,000
No itemizing required
However, charitable contributions must exceed 0.5% of AGI to be deductible.
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3. Donating Highly Appreciated Assets (Stock or Real Estate)
If you own assets that have significantly increased in value, donating them directly can be far more tax-efficient than selling first.
Benefits
Avoid capital gains taxes
Deduct the full fair market value
Charity receives the full value of the asset
Key Rules
Assets must be held at least one year
Deduction limited to 30% of AGI
Excess deductions may be carried forward up to five years
Real estate donations over $5,000 require an independent appraisal
Debt-free property is strongly recommended
This strategy is especially powerful if you were planning to sell the asset anyway and donate the proceeds.
4. Donor-Advised Funds (DAFs)
A Donor-Advised Fund (DAF) is a charitable investment account that allows you to:
Receive an immediate tax deduction
Decide later which charities to support
Donate cash or appreciated assets
Why Use a DAF?
Simplifies charitable giving
Allows you to “bundle” donations into one tax year
Ideal if you want to itemize in a specific year
Easier and less costly than setting up a private foundation
Tax Deduction Limits
Cash contributions: up to 60% of AGI
Appreciated assets: up to 30% of AGI
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Popular Donor-Advised Fund Provider
Three of the most popular Donor-Advised Funds are the Fidelity Charitable, Vanguard Charitable, and Schwab Charitable. They all have the option for self directed investments and relatively low to no minimum contributions to get started.
Planning Ahead: Timing Matters
To receive a deduction for 2025, donations must be completed by December 31, 2025
For 2026, you have more flexibility — and new deduction opportunities even if you don’t itemize
Taking time to plan how and when you give can significantly increase the impact of your generosity while reducing your tax bill.
Final Thoughts
Charitable giving is about more than generosity — it’s also about strategy. Whether you’re using retirement accounts, appreciated assets, or donor-advised funds, the right approach can help you give more while paying less in taxes.
If you have a question or would like a topic covered in a future episode, visit retirewithryan.com and click “Ask a Question.”
As always, have a great day, a better weekend, and I look forward to talking with you on the next blog post, podcast, YouTube video, or wherever we have the pleasure of connecting!
Written by Ryan Morrissey
President & Principle Wealth Advisor of Morrissey Wealth Management
Host of the Retire with Ryan Podcast