‘Tis the season to give. In fact, 36% of charitable giving occurs during the last quarter of the year—18% of it in December alone, according to a survey conducted by the Blackbaud Institute. And while the holidays are traditionally a time to reflect on our blessings and help those less fortunate than ourselves, there’s another factor influencing the timing of these donations: minimizing your tax bill.
Of course, any charitable donation should be driven mostly by altruism and the desire to make a difference. The great news is that we’re a generous society. Despite the uncertainty of the past few years, giving from individual donors remains on the rise. The Blackbaud Institute survey found that average gift size has nearly doubled over the last decade, from $727 in 2016 to $1,346 in 2025.
However, there’s nothing wrong with embracing the opportunity to improve your own finances while helping others. While most donors give the conventional way—via a direct cash gift—there are other less traditional but possibly more impactful ways to give that can also provide a boost to your tax strategy. Here are three tax-advantaged donation strategies to consider.
1. Donate valuable assets that aren’t cash, such as appreciated stock
While most of us think of making donations to nonprofits in cash, there are other advantageous ways to support an organization. For example, donating stock that has appreciated allows you to do good for the charity while also potentially eliminating your capital gains burden.
Here’s how it works: Rather than liquidating the stock and owing the capital gains tax, you can donate the security directly to the organization to be eligible for a deduction of the full fair market value, up to 30% of your adjusted gross income (AGI). Also, as of 2026, taxpayers who do not itemize their return can deduct up to $1,000 ($2,000 for married filing jointly) for cash donations to qualified 501(c)(3) charities. However, note that a provision in the One Big Beautiful Bill Act made it so that itemized charitable deductions require clearing a 0.5% adjusted gross income (AGI) floor and face a 35% maximum tax-benefit cap for top-bracket earners.
You also can donate items like vehicles, works of art, sports memorabilia, or rare books, to name a few. The benefit with these nontraditional assets is that you will receive the entire value as a tax deduction without having to absorb the capital gains tax you otherwise would owe.
With a car (and potentially other goods, depending on their value), work with the charity to determine the amount of the deduction. Often, especially in the case of a vehicle, a charity will sell the item, which means your deduction is based on the gross proceeds of the sale. There are exceptions, such as if the charity intends to use a vehicle for their own purposes—to deliver meals, for example.
The IRS has a handy guide to all any questions you may have about vehicle donation and how to determine the value of donated property. And always check with your accountant to help ensure you are complying with all legal requirements.
2. Use a qualified charitable distribution (QCD) from your individual retirement account (IRA)
If you are age 70½ or older, you can transfer money from your IRA to a charity as a qualified charitable distribution (QCD), which makes it tax-free up to $110,000 in 2026 ($220,000 if you file jointly). That can be particularly handy for those who have to make required minimum distributions (RMD), which is the minimum amount of money you must withdraw by law from any tax-deferred account, like an IRA or 401(k), starting at age 73 if you were born between 1951-59 or 75 if you were born in 1960 or later. A QCD, when taken prior to the RMD, can offset the RMD, thereby reducing taxes in that calendar year.
As mentioned above, the OBBBA introduced a 0.5% AGI floor for itemized charitable deductions and caps the deduction benefit at 35% for top-bracket taxpayers. But QCDs can bypass both restrictions—the distribution is excluded from AGI entirely, so it avoids the floor and isn’t subject to the cap. Additionally, QCDs directly reduce AGI rather than serving as an itemized deduction, helping to manage income-sensitive thresholds like Medicare premium surcharges (IRMAA) and helping you to qualify for other AGI-dependent deductions.
Reducing your IRA through a QCD also potentially helps reduce future income taxes and can reduce your overall taxable estate, which can eventually help protect your beneficiaries from a tax hit.
3. Create a donor-advised fund (DAF)
A donor-advised fund is an excellent way to achieve an immediate tax deduction without feeling obligated to give an entire gift at once. With a DAF, you contribute assets—cash, real estate, stock, even cryptocurrency—to a fund you establish through a custodial account, which then becomes a charitable account you personally control. Once open, you can start making gifts right away, or you can leave the money in there indefinitely, potentially taking advantage of growth as you determine how you want to spend it.
The entire amount of your initial donation to the DAF is deducted the year you establish it (subject to the limitations for itemizing mentioned above), even if you’ve yet to choose a charity. That makes it a savvy way to offset high taxes you otherwise might owe in a year when you have a particularly high level of income.
Here’s an example: Let’s say you intend to gift $10,000 per year over four years. You can put $40,000 into the DAF today and take the deduction for the contribution this year (subject to the limitations mentioned above) yet still maintain your regular schedule of making a $10,000 gift each year.
This strategy can also help protect you and your money in case the charity changes policies or otherwise aligns with activities or positions you disagree with. Although the gift to the DAF is irrevocable, you can redirect the remaining funds to other causes whenever you wish.
Give generously, but also wisely
No matter how you choose to give, here are three things to keep in mind.
Research the charity before donating
Confirm the charity you’ve chosen is a 501(c)(3), which means it has tax-exempt status. Then evaluate other facets that are important to you, such as financial health, key programs, results, and accountability and transparency policies. You can use reputable online charity-rating resources to compare various charities and find one that aligns with your goals.
Get the requisite paperwork
Always check with your advisor to make sure you have the correct documentation should the IRS come knocking. Typically, contributions of money or goods will require a letter from the charity confirming how much of your gift was tax-deductible. Then, verify that you have the required forms.
For example, you’ll need to complete Form 8283 for noncash charitable contributions, and/or Form 1098 for contributions of motor vehicles, boats, and airplanes. You also may need a written appraisal from a qualified appraiser depending on the value of the item. Always confirm with your advisor that you have the most up-to-date version of the forms and the correct paperwork.
Time it right
While it’s always a good time to be generous, there are some years you might find it even more beneficial to achieve a tax deduction. Often, it’s when you had a surprisingly high amount of income in one year—for example, if you sold your company. That’s when conducting thoughtful tax planning can be vital to help lessen the blow, and a philanthropic donation can be a key part of that. Remember that to qualify as a tax deduction, the gift must be paid before the end of the calendar year.
Most individual itemizers can deduct up to 60% of their AGI to charity, and if your donation exceeds that, you can carry over the remainder for up to five tax years. However, note that tax laws and income brackets can change frequently, so double-checking that you’re in compliance is always wise.
Finding creative ways to donate can benefit both you and the charity. And as you retain the glow of doing something nice—and also receive a tax deduction—you are liable to agree that it’s better to give than receive.
Just remember to talk with your advisor to help ensure that you’re benefitting to the full extent possible.
Debra Taylor is not affiliated with Cetera Wealth Services LLC. Any information provided by this individual is provided entirely on behalf of CWM, LLC and is in no way related to Cetera Wealth Services LLC or its registered representatives.
Converting from a traditional IRA to a Roth IRA is a taxable event.
Generally, a donor advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor’s representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account. Donors take a tax deduction for all contributions at the time they are made, even though the money may not be dispersed to a charity until much later.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Wealth Services LLC nor any of its representatives may give legal or tax advice.
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