Pictured above: Group volunteering at Girls Inc. of Metro Denver
With the changes that are a part of H.R. 1, also known as One Big Beautiful Bill Act (OBBBA), the emerging advice from professional advisors is to make your charitable contributions in 2025.
Your charitable tax benefits will depend on whether you itemize your tax return or take the standard deduction, and will vary based on your adjusted gross income.
To better understand the tax benefits specific to your context, we encourage you to reach out to a financial advisor or Certified Public Accountant (CPA).
Key takeaway #1:
Three major changes could affect the timing of when you make your charitable gifts. First, the standard deduction is increasing, making itemizing less advantageous. Second, deductions will be capped at the 35% tax bracket, negatively impacting those in the 37% income tax bracket. And third, those who itemize won’t receive any deductions for gifts under 0.5% of their adjusted gross income.
What does this mean: If you itemize, your tax benefits might be lower beginning in 2026, so there is a benefit to making gifts in 2025 before the rules change.
What you can do: Donor-advised funds (DAFs) are the perfect tool to bunch your gifting into one tax year. With a DAF, you can make a single gift in 2025 to maximize your tax benefits and then distribute that gift to nonprofits over the next few years to ensure the organizations and causes you care about can continue to receive your critical support. If you’re a current fundholder, reach out to our team and learn how to make the most of your giving before the end of year.
If you’re interested in opening a fund, reach out to us at information@denverfoundation.org.
Key takeaway #2:
After 2025, those who do not itemize can take a charitable deduction of $1,000 for single filers and $2,000 for taxpayers married and filing jointly with the standard deduction. In this case, gifts to DAFs are not eligible for this deduction.
What does this mean: If you don’t itemize, this deduction is a great benefit to begin or continue your journey of philanthropy. This is a great time to start planning how to support the causes you care about.
What you can do: Learn about the local causes and organizations in your community.
A simple way to support a wide range of community needs, from housing and education to the environment and economic opportunity, is through The Fund for Denver. Your contribution, no matter the size, becomes part of a larger pool that supports hundreds of nonprofits across Metro Denver.
Key takeaway #3:
Qualified Charitable Distribution (QCD) from a traditional retirement account by a person over age 70 ½ are not impacted by the new tax laws.
What does this mean: If you are over age 70 ½ with an Individual Retirement Account (IRA), you can make a distribution from your retirement account to a charitable organization. This distribution counts toward your required minimum distribution, but does not get recognized as income, which reduces your adjusted gross income and income taxes.
What you can do: Continue to take advantage of this benefit this year and next. If you’re a current fundholder, make sure to check our end of year deadlines to ensure your gift meets your required minimum distribution requirement in time. It’s important to note that QCDs cannot be donated directly into a donor-advised fund (DAF). However, The Denver Foundation has other great options, such as scholarships and designated funds, that are perfect for your QCD.
There’s a lot of information to follow, and we’re here to help. If you have any questions, reach out to us at information@denverfoundation.org.
We do not provide tax advice. Tax benefits vary depending on each individual’s situation. Please consult with your professional advisor for any tax-related advice.
