Five tax-smart strategies to maximize your charitable giving impact

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 For 2026, the standard deduction is $16,100 for single tax filers and $32,200 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 $6,000 more for single filers and $12,000 more for 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).

A qualified charitable distribution, or QCD, is a direct transfer of funds from your IRA to a qualified charity. If you’re currently taking required minimum distributions (RMDs) from a pretax IRA, another strategy that can reduce taxes is giving via a QCD 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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