10 ways to help clients give more to charity and reduce taxes

While 2024 taxes are top of mind for your clients, it's an ideal time to talk with them about tax-smart charitable giving in 2025. Whether a client itemizes, claims the standard deduction, or wants to maximize charitable impact regardless of their tax filing status, there are a variety of ways to give more to charities and potentially save on taxes. Here are 10 giving strategies to consider, many of which involve other financial moves you may make with clients in 2025.

Jump to giving strategy

To help you determine whether a giving strategy is ideal for a client, we've categorized the strategies based on tax deduction type.

For clients who itemize tax deductions:

• Rebalance your clients' investment portfolios using a part-gift, part-sale strategy.
• Offset tax liability on a Roth IRA conversion.
• Offset tax liability on a retirement account withdrawal.
• Combine tax-loss harvesting with a cash gift.

For clients who take the standard deduction:

• Give through an individual retirement account (IRA).
• Name a charity as a beneficiary of a retirement account.
• Bunch two or three years of charitable gifts into 2025.

For clients who want to maximize charitable impact, regardless if they itemize or take the standard deduction:

• Donate appreciated non-cash assets instead of selling the assets.
• Use a donor-advised fund to maximize your clients' charitable giving.
• Donate life insurance one of two ways.

Should clients itemize deductions or take the standard deduction?

Donors who itemize deductions typically do so because the total of their itemized deductions exceeds their standard deduction amount. For tax year 2025:

• Single taxpayers and married individuals filing separately may claim a $15,000 standard deduction.
• Married couples filing jointly may claim a $30,000 standard deduction.

Giving strategies for 2025 and beyond

For clients who itemize tax deductions:

1. Rebalance your clients' investment portfolios using a part-gift, part-sale strategy.

Itemized deductions

Rebalancing often involves selling appreciated investments that have exceeded target allocations and using the sale proceeds to buy more of the assets that have become underrepresented in a portfolio. To potentially reduce the tax liability of rebalancing, you can use a part-gift, part-sale strategy for your client. This involves donating long-term appreciated assets in an amount that offsets the capital gains tax on the sale of appreciated assets and claiming a charitable deduction. The gifting part of this strategy can be implemented with a donor-advised fund.

2. Offset tax liability on a Roth IRA conversion.

Itemized deductions

Converting a tax-deferred retirement account, such as a traditional IRA, to a Roth IRA can provide potential tax-free growth, tax-free withdrawals, and no annual RMD. The conversion will also eliminate the tax liability for beneficiaries (if account assets are passed to heirs). A Roth conversion will create taxable income, but by making a charitable contribution in the amount your client converted and claiming an itemized charitable deduction, they can reduce their tax bill. Don't forget to donate long-term held, appreciated assets to maximize the tax benefits.

3. Offset tax liability on a retirement account withdrawal.

Itemized deductions

Itemized charitable deductions may also help lower taxes on withdrawals, including RMDs, from your clients with tax-deferred retirement accounts. Note that generally your client needs to be over age 59½ on the withdrawal date to avoid an early withdrawal penalty.

4. Combine tax-loss harvesting with a cash gift.

Itemized deductions

For clients' whose publicly traded securities have declined below their cost basis, those assets can be sold at a loss and the cash proceeds donated to claim a charitable deduction. Then, through tax-loss harvesting, your clients can use the amount of loss to reduce their taxable capital gains and potentially offset up to $3,000 of their ordinary income. They may also carry forward any remaining loss amount to offset gains and income for future tax years.

For clients who take the standard deduction:

5. Give through an individual retirement account (IRA).

Standard deduction

For your clients who are age 70½ or older in 2025 with a traditional IRA,¹ they can direct qualified charitable distributions (QCDs)² of up to $108,000 to operating charities (excluding DAFs).³ The limit is $216,000 for married couples filing jointly. A QCD will not count as taxable income and can also be used to satisfy their IRA's required minimum distribution (RMD), up to the QCD limit of $108,000 in 2025, if they're age 73+.

6. Name a charity as a beneficiary of a retirement account.

Standard deduction

Unlike individuals who inherit taxable retirement accounts, public charities don't have to pay income tax on donated assets, making them ideal beneficiaries of IRAs or employer-sponsored retirement accounts. This means every penny of your client's donation will be directed to support their charitable goals after their lifetime. What's more, designating a charity as beneficiary of the account assets will remove the assets from your client's taxable estate.

7. Bunch two or three years of charitable gifts into 2025.

Standard deduction

Some of your clients may anticipate that their total itemized deductions for 2025 will be below their standard deduction amount. In this situation, your clients could consider combining or "bunching" charitable contributions for two or more years into 2025 to create itemized deductions that exceed their standard deduction. With a two-year bunching strategy, the clients would itemize deductions on their 2025 tax return and take the standard deduction on the 2026 return to potentially produce a larger two-year deduction than would be possible by claiming two years of standard deductions. A bunching strategy can be implemented with a DAF (see below), allowing your clients to continue giving to other charities each year.

For clients who want to maximize charitable impact, regardless of whether they itemize or take the standard deduction:

8. Donate appreciated non-cash assets instead of selling the assets.

Standard deduction | Itemized deductions

Donating appreciated stock, private business interests, real estate, and other non-cash assets held more than one year has two tax benefits. First, this method generally eliminates the capital gains tax that would otherwise incur if your client sold the assets and donated the sale proceeds, increasing the amount available for charities by up to 20%. Second, if your client itemizes deductions when filing their 2025 tax returns, they may claim a charitable deduction for the fair market value of the contributed assets.

Please be aware that gifts of appreciated non-cash assets can involve complicated tax analysis and advanced planning.

9. Use a donor-advised fund to maximize your clients' charitable giving.

Standard deduction | Itemized deductions

A best-in-class donor-advised fund (DAF) account, such as one with DAFgiving360^™, is a tax-smart and simple giving solution. A DAF provider is a public charity, and by contributing to a DAF account, your clients can potentially reduce their tax burdens, contribute assets for potential tax-free investment growth, and use contributions to recommend grants to other public charities immediately or over time. DAFgiving360 and other DAF providers also have specialized teams for accepting non-cash asset contributions. You can professionally manage the contributed assets and build a customized investment portfolio for DAF accounts with $100,000 or more at DAFgiving360.

10. Donate life insurance one of two ways.

Itemized deductions | Standard deduction

For your clients with life insurance that is no longer needed, they can donate it to charity. By contributing their policy during their lifetime, and with a charity selling it, they can use the value of the policy to benefit their favorite causes, while also claiming an income tax deduction and potentially reducing estate tax liability. Your clients can also name charities to be a beneficiary of the policy after their lifetime, helping extend their charitable legacy and removing the policy from their taxable estate.

Is there a limit on itemized deductions for charitable donations?

Charitable contributions are deductible for donors who itemize when filing their income tax returns. Overall deductions for donations to public charities, including DAFs, are generally limited to 50% of adjusted gross income (AGI). The limit increases to 60% of AGI for cash gifts, while the limit on donating appreciated non-cash assets held more than one year is 30% of AGI. Contribution amounts in excess of these deduction limits in 2025 may be carried over up to five subsequent tax years.

What could change in 2026 with new tax laws?

The Tax Cuts and Jobs Act was passed in December 2017 and is set to expire in December 2025. The law included these provisions affecting charitable giving:

• An increased charitable deduction limit for cash contributions from 50% to 60% of AGI
• Higher standard deduction amounts that started 2018 and were nearly double the amounts of 2017
• A significantly increased estate and gift tax exemption, creating a higher level at which assets start being assessed an estate tax

These provisions remain for tax year 2025 but are uncertain for 2026.
 

What you can do next

• Visit the DAFgiving360 Advisor resource center for related tools and resources to support your clients' philanthropy.
• Learn more about incorporating charitable giving strategies into your practice or request an information kit.
• Consider a custodian that is invested in your success. Contact us to learn more about the potential benefits of a Schwab custodial relationship.