Five tax-smart strategies to maximize your charitable giving impact

Summary

• While charitable-giving tax benefits were once straightforward, today’s landscape is more complex—with less than 10% of taxpayers itemizing deductions due to the increased standard deduction under current tax law.
• Strategic approaches, such as donating appreciated assets, making qualified charitable distributions from IRAs and “bunching” multiple years of giving, can help maximize your impact and tax benefits.
• Donor-advised funds offer flexibility by allowing immediate tax deductions while enabling donors to distribute gifts to charities over time, with potential for tax-free growth of the donated assets.

Tax-efficient charitable giving: It’s complicated

Once upon a time, the tax benefits from charitable giving were straightforward: Taxpayers gave money to a charity, and, in exchange, they got a like-sized deduction on their income taxes.

Much has changed, however, in the 100-plus years since Congress enacted the first charitable deduction. The maximum deduction has been amended a half-dozen times. The list of eligible charities and not-for-profits has grown too. The introduction of the standard deduction in 1944 affected not only the incentives for charitable giving but the preferred size and timing of many donations.¹ For retirees, a whole new set of tax rules now applies to charitable donations made from Individual Retirement Accounts (IRAs).

“Tax planning around charitable giving is complicated,” said Evan Potash, an executive wealth management advisor in TIAA’s Newtown, Pa., office. “Planning today with an advisor could help make a meaningful difference on your charitable impact and tax benefits.”

IRS guidelines for charitable tax deductions: What qualifies and how to claim

Before we explore strategies, here’s a primer on the IRS rules for claiming tax breaks on charitable gifts:

• Tax deductions can be claimed only for donations to qualified charitable organizations, which are operated exclusively for religious, charitable, scientific, public safety, literary and educational purposes or for other specified purposes that meet certain requirements and are tax-exempt under Internal Revenue Code Section 501(c)(3). (Use this IRS app to see if your preferred charitable organization qualifies.)
• Cash donations to public charitable organizations may, generally, be deducted up to 60% of adjusted gross income, with limits on non-cash contributions and contributions to private charities generally ranging from 30% to 50%.²
• You must maintain a record of the donation, such as a bank record or a letter from the qualified organization containing the name of the organization, the amount of the gift and the date of the donation.
• You can generally only deduct charitable donations if you itemize deductions on Schedule A (Form 1040), Itemized Deductions.
• In addition to deducting cash contributions, you generally can deduct the fair market value of other property you donate to qualified organizations. (For more information, see IRS Rules for Determining the Value of Donated Property.)

Benefits of tax-savvy strategic charitable donations

Taxpayers who itemize deductions on their income tax returns can deduct charitable gifts up to 60% of adjusted gross income (AGI). Thing is, less than 10% of taxpayers itemize—a number that’s gone down thanks to the Tax Cuts and Jobs Act (TCJA) of 2017, which doubled the size of the standard deduction.³ Barring congressional action, the standard deduction will revert to pre-TCJA levels for the 2026 tax year. For 2025, however, it remains elevated—$15,000 for single filers and $30,000 for married filing jointly.⁴

If you’re among the 90% of American taxpayers no longer itemizing, you may be missing out on income tax benefits from your charitable gifts. And, if you are itemizing, you may not be receiving as large a tax benefit as you had in previous years.

To help maximize your income tax benefits, here are five charitable giving strategies to consider:

1. If the numbers are the right size, itemize.

To decide if itemizing is the right strategy for you, add up the amount of your allowable itemized deductions, including home mortgage interest, property/state/local income taxes, and other common deductions. If that sum is greater than the standard deduction, then itemizing would leave you better off. If not, take the standard deduction. Note: For people over the age of 65, the standard deduction is larger—$17,000 for single filers and $33,200 for those married filing jointly, with both spouses over age 65.⁵

2. Donate appreciated assets like stocks or bonds.

A simple strategy for boosting your donation—and your tax deduction—is to give stocks, bonds or other appreciated securities directly to the charity of your choice. Simply writing a check or giving via credit card may be quick and easy, but it tends to be less tax-efficient than giving appreciated investments.

If you sell an appreciated stock or bond to pay for a charitable gift, you may owe capital gains tax. But if you gift the appreciated investment directly to the charity instead, you and the charity avoid the capital gains tax. You’d also be eligible for a charitable income tax deduction equal to the fair market value of the security you donate, up to 30% of your AGI if donated to a public charity.

For example, John purchased one share of stock in ABC Company years ago when it cost $100 per share. The share is now worth $1,000. If John gives that share of stock to his favorite charity, he’ll earn a $1,000 charitable income tax deduction without recognizing the $900 of capital gain that he would have recognized if he sold the share of stock himself.

3. Consider a qualified charitable distribution (QCD).

If you’re currently taking required minimum distributions (RMDs) from a pretax IRA, another strategy that can reduce taxes is giving via a QCD, which is a donation made directly from your IRA to your chosen charity. While QCDs don’t qualify for charitable deductions, they have other tax advantages just as valuable (or more so for taxpayers who don’t itemize). QCDs count toward satisfying annual RMD requirements and aren’t considered taxable income, unlike regular withdrawals from pretax IRAs. This is why it can make tax sense for retirees to make their charitable gifts via QCDs. Another plus: Retirees don’t need to itemize to get the benefit.

You can make a QCD once you reach age 70 ½, but it could make more sense to wait until you’ve reached age 73 and are required to take RMDs. For example, Sofia is 73 and has a pretax IRA with a $10,000 RMD. She directs $1,000 from her IRA to her favorite charity and takes the remaining $9,000 RMD. On her income tax return, she’ll report only $9,000 of taxable distributions from this retirement account. Reducing your taxable income also may be useful for nontax reasons, such as calculating Medicare premiums. To benefit from this strategy, you need to meet a few requirements, so talk to your TIAA financial advisor or accountant first.

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4. Bunch your charitable gifts.

Say, you’re a married couple who can’t claim charitable deductions because your itemized deductions are less than the $30,000 standard deduction. But imagine if instead of giving a standard sum to charity every year, you gave a much bigger sum every other year or every third year. Doing so might push your itemized deductions above the standard deduction threshold, which would lower taxes in your year of giving. This is why it can make sense to bunch, or prefund, two or three years’ worth of charitable gifts into one tax year.

For example, Jack and Aiysha are age 60, and they typically give $10,000 per year to charity. Their standard deduction for 2025 is $30,000. The only other itemized deduction available is the $10,000 state and local income tax deduction. If Jack and Aiysha give $10,000 to charity this year, they wouldn’t receive a charitable deduction because the standard deduction is higher. They could, however, make three years’ worth of gifts this year. Their itemized deductions would then total $40,000—$30,000 charitable donations plus $10,000 state and local income tax deduction—which is $10,000 more than the standard deduction.

5. Consider a donor-advised fund (DAF).

Did you know that you can create your own personal charitable giving fund? A donor-advised fund is itself a charitable entity, and its key benefit is flexibility. Funding a DAF allows you to claim an immediate charitable tax deduction—and then decide when to distribute the money to your favorite charities on a timetable that works for you. While you decide how best to bestow support, the funds in your DAF are invested and have the potential to grow. Any growth within the fund is tax-free—enabling you to give even more to important causes. For an even greater tax benefit, you can fund your DAF with appreciated securities rather than cash.

DAFs make bunching easy too. In the example above, Jack and Aiysha could make the $30,000 gift to their donor-advised fund and benefit from the charitable income tax deduction this year. They could then distribute $10,000 to charities annually from the donor-advised fund, thereby maintaining their accustomed pattern of giving.

Identify which strategy is right for you.

There is no “one size fits all” strategy for charitable giving. For more information on giving strategies, check out TIAA Wealth Management’s Charitable Giving Guide, or talk to your wealth management advisor. Don’t yet have an advisor? Schedule an appointment.