Compare cash, appreciated shares and eligible IRA gifts. Separate 2025 giving rules from charitable deduction changes that begin in 2026.
September 8, 2025 · Financial Forte Staff
Historical article: prepared retrospectively using information available as of September 8, 2025.
Charitable giving often becomes urgent in December, when the calendar is crowded and a favorite organization sends its final appeal. A little preparation now can make the gift easier to complete and help you choose which assets to use. It can also prevent a tax assumption from driving a donation that does not fit your finances.
Start with the amount you want to give and the cause you want to support. Then compare cash, appreciated investments and an eligible IRA gift in the context of your tax return and cash needs. The most useful strategy is one that funds the intended gift without creating an avoidable problem elsewhere.
Set the giving budget before choosing the tax treatment
Review upcoming expenses, emergency reserves and retirement withdrawals before committing assets. A deduction reduces taxable income when the applicable requirements are met; it does not reimburse the entire gift. Giving more solely to obtain a deduction still leaves less available for other goals.
Confirm that the recipient qualifies for the treatment you expect. A worthwhile cause is not automatically an eligible charitable organization for every tax provision. Keep acknowledgments and transfer records, and ask about acceptance procedures before sending securities or other property. Noncash gifts can require additional documentation or valuation work.[1]
For 2025, the ordinary charitable contribution deduction generally requires itemizing, subject to the relevant limits. A donor taking the standard deduction should not assume that an ordinary cash gift generates an additional federal charitable deduction. The tax benefit and the personal value of the gift are separate questions.[1][4]
Compare cash with appreciated investments
A hypothetical example shows why the asset choice can matter. Elaine intends to give $10,000 to an eligible public charity. She owns taxable-account shares worth $10,000 that she purchased for $4,000 and has held for more than one year. Assume a sale would generate a $6,000 long-term capital gain taxed at an illustrative 15% federal rate, with no other taxes or offsets.
Selling the shares would create an illustrative $900 capital gains tax. If Elaine then gives the full $10,000 proceeds, she needs another source to cover that tax. If she instead reserves $900 from the proceeds, only $9,100 remains for the gift: $10,000 less the assumed $900 tax reserve. The timing and source of the tax payment affect her cash plan even though the charity's needs are unchanged.
A properly completed direct gift of eligible appreciated shares can avoid recognition of that gain on the donated shares. A potential fair-market-value deduction depends on itemizing, the recipient, the property and applicable limits. It is not an automatic $10,000 reduction in the tax bill.[1]
Elaine should compare this with using cash she already planned to give. If selling the investment would help rebalance a concentrated portfolio, a direct gift may serve both purposes. If the shares have declined below their cost, the analysis changes; donating appreciated property is not a universal instruction to donate every investment directly.
Consider an IRA gift when eligible
A qualified charitable distribution, or QCD, can allow an eligible IRA owner age 70½ or older to direct a qualifying distribution to an eligible charity without including that amount in income. For 2025, the annual exclusion limit is $108,000 per eligible individual. The transfer must satisfy the QCD rules; donor-advised funds are not eligible recipients.[2][3]
For example, assume Robert has a $20,000 required minimum distribution from an entirely pretax IRA and wants to give $10,000. If he completes an eligible $10,000 QCD and takes the remaining $10,000 personally, the QCD can count toward the RMD while the personal distribution is generally taxable. That leaves $10,000 of the illustrated $20,000 RMD to be included in income, assuming no other basis or adjustment. He cannot also claim a charitable deduction for the amount excluded as a QCD.[2]
If Robert first withdraws the $10,000 into his own bank account and later writes a personal donation check, that sequence does not retroactively become a QCD. Coordinate with the custodian before the withdrawal. Confirm that the charity receives the payment in time and that the transaction is recorded correctly.
Deductible IRA contributions after age 70½ can affect the excludable QCD amount under a special offset rule. An owner with that contribution history should have the calculation reviewed rather than relying only on age and the annual limit.[2]
Keep 2025 and 2026 rules separate
The federal law enacted July 4, 2025 includes charitable changes that begin in 2026. Eligible nonitemizers will have a deduction for certain cash contributions up to $1,000, or $2,000 on a joint return. A new 0.5% floor for individual itemizers uses the statutory contribution base, generally an adjusted-gross-income measure. These are not rules for treating a 2025 gift as though it occurred in 2026.[4]
Those changes make timing worth reviewing, but they do not mean every donor should accelerate or postpone gifts. Compare the actual years, itemizing status, income, recipient eligibility and amount. Also consider whether the charity needs the funds now and whether a large gift would reduce your financial flexibility.
A donor-advised fund may help organize eligible gifts, but contributions are generally irrevocable and the arrangement has its own rules and costs. It should not be presented as a temporary personal savings account or a way to make an otherwise ineligible QCD qualify.[1][2]
Confirm the recipient and transfer instructions independently, then choose a practical completion date that leaves time for the institution and charity to process the gift. Gather the acknowledgment and review the tax reporting with your preparer. Good giving planning keeps the charitable purpose at the center while making the funding method, timing and financial consequences clear.
Related reading
- Finish Year-End Giving With the Right Records
- Charitable Giving in 2026: Recheck the Tax Assumptions
Have more questions about charitable giving and retirement tax planning? Complete the Financial Forte questionnaire to get started on connecting with an advisor who can help answer your questions and explore next steps.
The contact invitation is current; it does not imply this contact path existed on the historical reference date.
Educational information, not personalized investment, tax, legal or benefits advice. Examples use hypothetical assumptions. Verify current rules and your circumstances before acting.
Sources
- [1] IRS Publication 526: Charitable Contributions — 2023 edition; February 29, 2024
- [2] IRS Publication 590-B: IRA distributions — March 19, 2025 cover
- [3] IRS Notice 2024-80: 2025 retirement limits — November 2024; IRB November 18, 2024
- [4] Public Law 119-21, sections 70424–70425: charitable deductions — Enacted July 4, 2025
