Navigating new laws: Opportunities for 2025

It’s more important than ever to stay informed about how changes in the tax law may affect your charitable giving. The recently passed One Big Beautiful Bill Act (OBBBA) creates challenges as well as opportunities for structuring your philanthropy. We encourage you to reach out to your attorney, CPA, and financial advisor before the end of the year, to evaluate how the changes in the law impact your own situation.

As always, RSF Foundation is happy to work side-by-side with you and your tax advisors to build a plan for 2025 and beyond that not only supports your vision to make a difference in the community, but also addresses the rule changes under the OBBBA.

Key Topics to Discuss with Advisors

To help you along this journey, we’ve provided a quick checklist below of items to discuss with your advisors.

1. Evaluate whether “bunching” may be right for you.

·      Higher Standard Deduction for 2025

The OBBBA increases the 2025 standard deduction to $15,750 for single filers and $31,500 for married couples filing jointly. The higher standard deduction will likely impact tax-motivated charitable giving, even with the expected uptick in the number of itemizers thanks to the OBBBA’s state and local tax deduction allowances.

·      Extra Deduction for Seniors

There are important exceptions and nuances to consider, which you’ll want to discuss with your advisors. For example, if you are 65 or older, you’re eligible to receive an additional $6,000 “bonus” deduction, but it begins to phase out if your modified adjusted gross income (MAGI) exceeds $75,000.

·      Using a Donor-Advised Fund for Bunching

Based on the increases to the standard deduction, you may want to talk with your tax advisors about “bunching” charitable gifts for 2025 using a donor-advised fund. Through this technique, you can make several years’ worth of charitable contributions in a single year to exceed the standard deduction threshold, thereby maximizing tax benefits in that year. Over the following years, your donor-advised fund can distribute grants to charities over time according to your wishes.

·      Anticipating 2026 Deduction Limits

There are more reasons you might want to talk with your advisors about front-loading charitable contributions in 2025. In 2026, a new provision under the OBBBA takes effect that allows you to take a deduction for charitable gifts only to the extent that your giving exceeds 0.5% of your AGI. What’s more, if you’re in the highest tax bracket, 37%, you can still only deduct charitable contributions at the 35% rate.

·      Timing Your Gifts

The upshot here is that you and your tax advisors may decide that 2025 is the year to bunch charitable contributions to maximize tax savings.

2. Get familiar with the deduction for non-itemizers, coming next year.

If you don’t itemize your deductions, you’ll be glad to know that starting in the 2026 tax year, you can claim a deduction for cash gifts to qualifying public charities up to $1,000 for single filers and $2,000 for married couples filing jointly.

Excluded from this new provision are gifts to donor-advised funds and noncash gifts, which is unfortunate because those vehicles are popular, convenient, and tax effective. Still, keep in mind the new deduction, and, if you’re encouraging your adult children to get involved in philanthropy, make sure they are aware of this deduction. It could be particularly helpful for young people because many young people do not yet itemize.

3. If you are over 70 ½, review the benefits of Qualified Charitable Distributions.

·      How QCDs Work

A Qualified Charitable Distribution (QCD) enables individuals aged 70 ½ or older to donate up to $108,000 per year (as of 2025) directly from an IRA to eligible charities, and in the process exclude the donated amount from taxable income altogether–rather than relying on an itemized deduction.

·      Why QCDs May Be Even More Valuable Now

QCDs may be especially advantageous after the OBBBA’s significant increase to the standard deduction because QCDs provide a direct tax benefit regardless of whether you itemize or take the standard deduction. Indeed, using a QCD to fulfill required minimum distributions (RMDs) can lower your adjusted gross income, potentially reducing taxes on Social Security income and Medicare surtaxes and helping you sidestep the new floors and caps on itemized charitable deductions imposed by the OBBBA starting in 2026.

Moving Forward with Your Philanthropy

The RSF Foundation is happy to collaborate with you and your tax advisor as you explore ways to achieve your philanthropic goals under the new laws. We look forward to hearing from you!

To learn more about Rancho Santa Fe Foundation, feel free to reach out to us at info@rsffoundation.org.