As we approach year-end, many clients are thinking about charitable giving—both to support the causes they care about and to take advantage of available tax benefits.
Because the standard deduction has increased significantly in recent years, fewer taxpayers now itemize deductions. For 2025, the standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly. (Taxpayers age 65 or older receive even an even higher standard deduction amount.) This means that unless your total itemized deductions (charitable gifts, mortgage interest, state and local taxes, etc.) exceed these amounts, you won’t receive a tax benefit from your charitable contributions in the traditional way.
However, there are two effective strategies that can help make your giving more tax-efficient:
1. Qualified Charitable Distributions (QCDs)
If you’re age 70½ or older and have an IRA, you can direct up to $108,000 per year (for 2025) from your IRA directly to qualified charities. These gifts count toward your required minimum distribution (RMD) if you’re subject to one, and the distribution is excluded from your taxable income—even if you take the standard deduction. This is often the most tax-efficient way to give for retirees with IRAs.
2. Donor-Advised Fund (DAF) “Bunching” Strategy
By contributing several years’ worth of charitable donations to a Donor-Advised Fund in a single year, you may be able to exceed the standard deduction threshold and itemize that year, receiving the full tax benefit of those contributions. You can then direct grants from the DAF to your favorite charities over the following years while taking the standard deduction in those subsequent years. Once the DAF balance is depleted, you can repeat the process.
For example, if you typically give $10,000 annually to charity, you might contribute $50,000 to a DAF in 2025, itemize your deductions that year, and then grant $10,000 annually to charities from the DAF over the next five years while taking the standard deduction in 2026-2030.
Which Strategy Is Right for You?
Each approach can be effective depending on your age, income sources, and charitable goals. If you have an IRA and are over 70½, QCDs are often the simplest and most beneficial option. If you’re younger or want to maximize the tax benefit of larger charitable gifts, a DAF bunching strategy may work better. Some clients benefit from using both strategies.
White Oak Financial Management can help you evaluate which approach makes the most sense for your situation and can assist with implementation and coordination within your overall financial plan.
If you’d like to explore how these strategies could work for you before year-end, please reach out. I’m happy to discuss them in more detail.
While the author is a Certified Financial Planner™ professional, he is not a tax advisor. The information above is provided for general educational purposes only and should not be considered specific tax advice. Please consult your CPA or qualified tax professional before implementing any strategy.
