TAXES | Bunching Charitable Donations
From 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) nearly doubles the standard deduction to $12,000 for single filers and $24,000 for joint filers. The TCJA also reduces, or eliminates, several itemized deductions. As a result, millions of taxpayers who previously itemized deductions will instead claim the standard deduction, thereby eliminating the tax benefit from their charitable donations.
Tax management is not a suitable sole purpose for charitable giving, but if you are planning on making charitable gifts, then you should do so as tax efficiently as possible.
Depending on the amount you plan on donating and your other potential deductions like SALT or mortgage interest, one strategy that allows taxpayers to leverage their planned charitable contributions is to bunch multiple years’ donations into one year. Tax payers who bunch donations would alternate between a bunched year where they itemize their deductions and a non-bunch year where they claim the standard deduction on their tax returns.
As always, we recommend you consult with your tax advisor to determine how these changes affect your personal circumstances.