This time of year, charitable giving is on many people’s minds. Nonprofits increase our awareness of those in need, and during the Christmas season our hearts—and sometimes our wallets—tend to be a bit more generous. But I encourage you to give wisely.
Here are some guidelines to help you make informed decisions.
Are they truly a charitable organization?
Start by verifying that the organization is approved by the IRS as a designated charity eligible to receive tax-deductible donations. Visit the IRS Tax-Exempt Organization Search to check their status. Religious organizations and churches are automatically considered tax-exempt and will not appear on the list.
Do they fund worthwhile programs?
Every IRS-approved nonprofit must file an annual Form 990, which is public. Two helpful sites offering free access are:
- www.guidestar.org
- www.charitynavigator.org
These resources let you review accomplishments, executive salaries, and how funds are allocated between programs, management, and fundraising. Another great option is volunteering so you can see the impact firsthand.
Will the donation provide a tax benefit?
Maybe—depending on your situation. Donations must be made to a qualified 501(c)(3) public charity. In addition, your itemized deductions must exceed your standard deduction. For 2025, the standard deduction is $31,500 for married filers and $15,750 for single filers. Itemized deductions include state taxes, mortgage interest, and donations. More taxpayers may qualify this year since the state tax deduction cap increased from $10,000 to $40,000.
Tax-planning ideas for gifting:
- Donate appreciated stock. If you’ve held appreciated stock for more than a year, consider donating it. You avoid capital gains tax and receive a deduction for the fair market value.
- Donate part of your IRA distribution. If you’re over age 70½, you can make qualified charitable distributions from your IRA, lowering your taxable income and potentially improving your tax situation overall.
- Open a Donor-Advised Fund (DAF). You can contribute a larger amount in one year to qualify for a tax benefit, then distribute the funds to charities over time.
- Large non-cash donations. For donations valued over $5,000, the IRS requires a formal appraisal. Without one, you’re limited to claiming $4,999.
Upcoming changes in 2026:
- A new above-the-line deduction: $1,000 for single filers and $2,000 for married filers (not applicable to DAF contributions).
- A 0.5% of income floor for itemized charitable deductions, similar to the medical expense floor.
- A deduction limit for high earners in the 37% tax bracket.
If you’re hoping for tax benefits from your giving, please meet with your tax advisor to evaluate your specific situation.
Mary Guldan-Lindstrom, CPA