The Tax Cuts and Jobs Act (TCJA) of 2017 resulted in significant changes to the U.S. tax code. Many of these changes will expire after 2025 unless renewed by Congress. I find it interesting that one provision that will not expire is the lowering of the Corporate Tax Rate from 35% to 21%. It was made a permanent change, at least until Congress votes to change it again. A major change that impacted charitable contributions was the doubling of the standard deduction and indexing of this amount for inflation. In 2024, the standard deduction for a married couple filing jointly is $29,200 and $14,600 for an individual. Before this change, 30% of households were itemizing their taxes, but only 10% after the change. A recent study by the National Bureau of Economic Research estimates a decrease of $20 billion in charitable giving in 2018. And the study estimates that $16 billion of that charitable giving loss was permanent and did not return in subsequent years, due to having fewer incentives for charitable gifts for tax purposes. Now, I don’t believe anyone makes a charitable gift solely for tax purposes, but I do believe it can impact the size of that gift. Truman Heartland Community Foundation (THCF) can help you make an even greater impact through a strategic giving technique called “charitable bunching.” By leveraging this strategy, you can maximize your charitable giving and achieve significant tax benefits. Here’s how. Charitable bunching involves consolidating several years' worth of donations into a single tax year to surpass the standard tax deduction and receive a more substantial tax benefit. While this approach requires some careful financial planning, the rewards are well worth it. For instance, if you typically donate around $5,000 annually to your favorite charities, even with other deductions, you may not meet the current standard deduction of $29,200 for married couples. However, by bunching at three years of donations together in a donor advised fund (DAF), you can itemize your $15,000 in donations in the current tax year, leading to a larger tax benefit than if you were to make smaller annual donations. Then, you simply support your favorite charities over the next three years through grants from your DAF. When you make this gift to your DAF by utilizing appreciated securities, you avoid paying the capital gains tax and have 15-20% more to give away, depending on your tax bracket. THCF has served as a central hub for philanthropy in suburban Eastern Jackson County for more than 40 years. We enable donors of all kinds to contribute to their favorite causes and organizations. Now is a good time to think about year-end tax planning, so ask your tax professional or financial advisor if charitable bunching could help you maximize your giving. Or call (816-836-8189), click (www.THCF.org), or come by our Independence office, and we’ll help you make a lasting difference in your community.  Comments are closed.
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