There’s something about the holiday season that encourages many people to make end-of-year donations to charity. If you’re one of them, you’re not alone. More than 30% of all charitable giving takes place in December.
While nearly everyone gives because they want to do something to help make the world a better place, many are also motivated by another factor: reducing taxes.
Whether it’s to avoid capital gains or take advantage of new tax breaks provided by the One Big Beautiful Bill Act (BBBA), you may have more reasons than ever to consider several end-of-year tax-reducing charitable giving strategies.
1. See if you’re now able to deduct donations
You can only deduct donations if the total amount of all your itemized deductions exceeds the standard deduction ($15,750 for single filers, $31,500 for married couples in 2025). For those over 65, additional “senior deductions” push the standard deduction up to $23,750 for single filers and $47,500 for married couples.
If the combined amount of all of your expenses has been less than your standard deduction, itemizing doesn't make sense. However, one factor may change this equation: the BBBA-mandated increase in the State and Local Tax (SALT) allowance from $10,000 to $40,000. Those who pay close to this amount in real estate and state and local income taxes may find that if they also add the deductible value of charitable donations, mortgage interest, personal property taxes, casualty and theft losses and other eligible expenses, the combined amount may be higher than their standard deduction allowance.
2. Donate appreciated investments
Given that the stock market has delivered large gains in many investment portfolios, now may be a good time to consider giving shares of one or more of your highly appreciated long-term investments to a public charity if you want to avoid incurring capital gains if you sell them at a profit.*
You must have held these investments for at least one year to take advantage of this strategy. The value of the donation will be the closing price of the investment on the day you donate it. However, the amount you can deduct will generally be limited to 30% of your adjusted gross income (AGI). And you’ll only be able to deduct this amount if you itemize deductions.
3. Establish a donor-advised fund
If you’re not sure which charities you’d like to give to, consider establishing a donor-advised fund account. They offer the same immediate charitable tax benefits as giving directly to a public charity and can accommodate donations of appreciated investments.
Donor-advised funds offer grant-making benefits similar to those of private foundations.
Once you’ve funded your donor-advised fund account, you or anyone you authorize can recommend that grants be made to one or more qualified public charities. The donor-advised fund trustee reserves the right to approve or reject these requests.
A donor-advised fund is also a great option for establishing a family philanthropy program. In addition to authorizing your children to recommend grants, you can also designate them or anyone as successors to take over grantmaking activities after you’ve passed on.**
4. Take advantage of qualified charitable distributions
If you’re over age 70 and have a Traditional IRA, you can donate money directly from that account every year to one or more public charities using a qualified charitable distribution (QCD).
If you have several IRAs, you can make separate QCDs all year long, as long as the aggregated amount doesn’t exceed the annual limit of $108,000.
QCDs don't count as charitable deductions on your tax returns. But if you’re already taking taxable Required Minimum Distributions (RMDs) from your IRA, QCDs could lower your taxable income.
Here’s how. You can use the amount of a QCD to offset the amount of the RMD you normally take that year.
For example, if your RMD for 2026 is $90,000, making $100,000 in QCDs will reduce your RMD by $90,000, eliminating the need to take an RMD.
To take advantage of this strategy, you must make all of your QCDs before you take your RMD.
There are some issues to consider. You can’t make a QCD to a donor-advised fund or a private foundation. And you need to get documentation of these donations for tax purposes.
You also can’t make QCDs from employer retirement plans. That may be a good reason to roll over assets from these accounts into your IRA.
Remember: “qualified” is key
The charitable tax benefits these giving strategies offer only apply to donations made to a qualified public charity. Nearly all 501(c) nonprofits are qualified public charities. Which kinds of charities generally aren’t?
- Private foundations
- Political organizations, PACs and lobbying groups
- Labor unions
- Social and recreational clubs, like lodges and fraternities
Timing is crucial
If you want to use any of these charitable giving strategies to reduce your 2025 tax bill, it’s better to act sooner rather than later to complete them before year end.
For direct cash donations to a charity, plan to get your check or electronic funds transfer in their hands before Christmas so they’ll have time to process it.
If you want to donate shares of investments, try to initiate this transfer with your brokerage company as early as possible in December.
Likewise, if you want to establish a donor-advised fund account, some trustees recommend starting the process no later than mid-December, although you have until December 31 to make your initial donation to have it count for the current tax year.
If you're not sure which, if any, of these options make sense from both a charitable giving and tax planning point of view, set up a time to speak with a financial advisor or tax professional. If a financial advisor manages brokerage accounts or IRAs you want to use for these strategies, make sure you have this conversation well before year-end so they'll have enough time to complete them.
This article was authored by Chris Gullotti and Jeffrey Briskin. Chris is a financial advisor and Partner with Canby Financial Advisors, a SEC-registered investment adviser. SEC registration does not constitute an endorsement by the SEC nor a statement about any skill or training. Chris can be reached at 508.598.1082 or cgullotti@canbyfinancial.com. Jeffrey Briskin is Director of Marketing at Canby Financial Advisors.
©2025 Canby Financial Advisors.
*Of course, past performance is in no way indicative of future results, and you may incur a gain or loss when you sell any stock or security.
**Generally, a donor advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution the organization has legal control over it. However, the donor, or donor’s representative, retains advisory privileges with respect to the distribution of funds and the investment assets in the account. Donors take a tax deduction for all contributions at the time they are made, even though the money may not be dispersed to a charity until much later. Because you receive the tax benefit immediately, your contribution is irrevocable, which means your assets cannot be returned to you for any reason.