Tax Advantage Giving Strategies to maximize your tax benefits
1. Consider a Qualified Charitable Distribution (QCD) from an IRA
If you are 70½ or older, you can make a QCD, which is a direct transfer of funds from your IRA to Christus Victor.
• Reduce taxable income: A QCD is excluded from your taxable income, a benefit that can be especially valuable if you do not itemize deductions. Since the money comes directly from the IRA to Christus Victor, it is excluded from your taxable income, rather than deducted. This lowers your Adjusted Gross Income (AGI), which reduces your overall tax liability, potentially lowers Medicare premiums, and may increase eligibility for other tax benefits.
• Satisfy Required Minimum Distributions (RMDs): If you are 73 or older, a QCD can count toward your annual RMD, helping to lower your overall taxable income.
2. Donate appreciated assets
Instead of donating cash, giving highly appreciated assets, like stocks or real estate that you have owned for more than a year, can provide a significant tax advantage.
• Avoid capital gains tax: You can avoid paying capital gains tax on the asset’s appreciation, which can be up to 20%.
• Claim a larger deduction: You can generally deduct the full fair market value of the asset, subject to annual limits based on your adjusted gross income (AGI).
3. “One Big Beautiful Bill” Act impacts on giving in 2025 & 2026
1. Increased incentive to “bunch” donations in 2025. For donors who itemize, 2025 is the last year to take full advantage of current tax rules before new limitations take effect in 2026. This encourages a “bunching” strategy, where donors make larger contributions this year to maximize their deductions.
• New floor for itemizers: Starting in 2026, itemizing individuals can only deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI).
• Cap on deductions for high earners: Also beginning in 2026, taxpayers in the 37% bracket will see the tax benefit of their itemized deductions, including charitable gifts, capped at 35%.2. New deductions for non-itemizers starting in 2026. The bill creates a new “above-the-line” charitable deduction for those who take the standard deduction, which is most taxpayers.
• Deduction amount: A deduction of up to $1,000 for single filers and $2,000 for joint filers will be available starting in 2026.
• Restrictions: This deduction is limited to cash gifts made directly to Christus Victor and is not eligible for contributions to donor-advised funds (DAFs).
4. Use a donor-advised fund (DAF)
A DAF is a charitable investment account that offers an immediate tax deduction when you contribute to it.
• Separate deduction from donation: You receive your tax deduction in the year you fund the DAF, but you can distribute the grants to charities from the account over a longer period.
• Invest for growth: The funds in the account can be invested, allowing the money to grow tax-free, potentially increasing the amount you can give to charity over time.
5. Charitable Remainder Trusts
A charitable remainder trust (CRT) is an excellent way to benefit yourself, your spouse or other family members and provide financial support to your favorite charitable causes. A testamentary CRT through your will or living trust can provide income for your family. After all of the payments are made to family, the remaining trust assets will be given to charity. You may also consider funding a lifetime CRT. You will receive a charitable income tax deduction and trust income payouts
6. Charitable Gift Annuities
A charitable gift annuity is a contract involving you and a charity. You make a gift to the charity in exchange for fixed payments for the life of one or two persons. After all payments are completed, the charity receives a gift. A gift annuity funded during life provides you with a charitable income tax deduction and partly tax-free income.
Christus Victor and its staff do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only.
