Tips for Year-End Giving

At the Community Foundation, we’re grateful to be a resource and trusted partner to help make your year-end charitable giving local, personal, and meaningful.

This year, updates to new tax provisions may influence your decisions on your year-end giving and your goals for 2026 and beyond. Signed into law on July 4, 2025, the “One Big Beautiful Bill Act (OBBB or H.R.1) contains important considerations for donors when these new tax rules take effect.

Because the new deduction limitations (see below) don’t take effect until 2026—and the updated state and local tax (SALT) provisions begin in 2025—November and December are the final months for most taxpayers to capture the maximum charitable tax benefits under current rules.

Upcoming Changes Impact 2025 Charitable Giving

Here’s what’s changing in 2026— and why taking action in 2025 matters to maximize your charitable deductions and the impact of your generosity.

Two New Limitations on Tax Benefits of Itemized Deductions 

1. Deductibility of itemized deductions is reduced for income earners in the 37% tax bracket. Starting January 1, 2026, total itemized deductions (including charitable deductions) for taxpayers in the 37% marginal income tax bracket are subject to a 2% reduction.  
2. New 0.5% AGI Floor – Beginning in 2026, the first 0.5% of Adjusted Gross Income (AGI) in charitable giving will no longer be deductible for those who itemize deductions. This means that 0.5% of a donor’s AGI will be subtracted from the overall charitable deduction amount, reducing the tax benefit of the charitable deduction.  

Please note that individuals may still deduct up to 60% of their Adjusted Gross Income (AGI) in cash contributions and up to 30% of AGI for donations of long-term appreciated securities to charities. AGI is your total gross taxable income minus certain adjustments.

A New Opportunity

The State and Local Income Tax (SALT) increases to $40,000 in 2025 for taxpayers with Adjusted Gross Income under $500,000. Taxpayers with high state and local taxes are more likely to itemize and take advantage of charitable donations before the new limits on tax benefits (above) take effect in 2026.

Three Tips for Year-End Giving

If you’d like to take advantage of these itemizing rules, here are three smart year-end giving tips.

1. Bunch multiple years’ gifts into a Donor-Advised Fund. 

“Bunch” your 2026 giving with 2025 contributions before year-end to pre-fund several years of giving while deductions are still at 37% and before the 0.5% “floor” goes into effect. You'll get the full tax deduction now, while spreading out grants to your favorite charities over time, and benefiting from the larger standard deduction in those later years. We can set up a Donor-Advised Fund for you in one meeting or you can set it up online.

Learn more about Donor-Advised Funds

2. Consider a gift of appreciated stock or mutual funds. 

If you have stocks or other publicly traded securities that are worth more than what you paid for them, donating these to charity at the end of the year removes your tax liability from the stock sale and can increase your giving power by up to 30% compared to selling the stock and giving cash. This strategy also offers a chance to rebalance your portfolio. By contributing appreciated or concentrated holdings—like stock from a longtime employer—you can turn personal investments into community impact while optimizing your portfolio’s health.  

Stock transfer timelines can vary by provider but must be received by December 31 for the 2025 tax year. The Foundation can accept marketable securities of any kind. We recommend initiating year-end mutual fund gifts by December 1 and stock gifts by December 20.

3. Use your required IRA distribution for giving, skip the taxes.

If you are age 70½ or older, you can transfer up to $108,000 tax-free from your traditional Individual Retirement Account (IRA) directly to a charity. If you are 73 or older, the tax-free transfer counts towards your Required Minimum Distribution (RMD). While you can’t fund your DAF with a QCD, these tax-free rollovers can benefit any public charity, any of the Community Foundation’s grantmaking funds including the Greatest Needs Fund, Supporting Immigrants of Santa Cruz County Fund, or Friends of the Foundation Fund.  Or we can help you set up a new fund that benefits an interest area of your choice or a specific nonprofit. Please initiate your IRA gift by December 15th.

We're your partner in giving.

Let us do the legwork! Working with the Community Foundation gives you access to our extensive knowledge of the local nonprofit community and the broad charitable needs of our region—so you can stay informed about the organizations you support and the effect your giving will have on the future of our community. We’re happy to help!

This article is provided for informational purposes only and is not intended as legal, accounting, or financial planning advice. Please consult your tax advisors about your specific situation; we’re happy to partner with them.