Top 2 New Tax Rules That Could Change Your 2025 Charitable Giving

Hey everybody, I'm Bruce Lorenz, financial advisor here at Bolden. Today we're going to talk about charitable contributions. Why would anyone want to make a charitable contribution? Well, there are those that have genuine concern for others and want to help others, have been involved in an organization and have seen firsthand the benefits the organization provides. Others, let's say, want to join a social network. Join others that have a similar passion for a community need. Hey, you knew we were going to talk about finances, right? There's a financial benefit. Many charitable contributions can be used as a deduction on your taxes on your tax return, lowering your taxation. There's a couple of new rules coming into play in 2026 that may give us some direction on our year end gift giving plans in 2025. The first rule coming in is a 0.5% floor for itemized deductions. That's 0.5% of your adjusted gross income. In other words, you must Give more than 0.5% of your adjusted gross income for your charitable contributions to count as as an itemized deduction. Let's do a quick example. Let's say you expect your adjusted gross income next year to be $100,000. You would need to go over 0.5%, in this case $500 for your contributions to count as a deduction. So if you gave $5,000 next year, you would get a $4,500 deduction deduction on your taxes because you needed to meet the 0.5% in our example $500 floor. The second rule is an above the line deduction for your charitable contributions if you do not itemize. And so those numbers, $1,000 for single individuals or 2,000 for married couples can be used on your tax return next year without itemizing. And this will reduce your taxation. So let's think about how those rules can help us as we end 2025. Let's say you are already itemizing your deductions this year and you plan to give $1,000 yet in December. You might as well go ahead and do that. You're already itemizing. You're going to get the full benefit of that thousand dollars as a deduction on your tax return. Let's say though that you're not itemizing and you as an individual have that same $1,000 you want to give to charity or 2,000 as a couple. If you're not itemizing this year, that's not going to give you any tax benefit. I would say, wait, stop, give that donation in January and get a deduction that will lower your your taxes next year. And so Those are the two rules. 0.5% floor for itemized deductions and new above the line deduction of 1,000 per individual or 2,000 for a married couple where you can get those dollars deducted and lower your taxation next year. And so remember, with your money, it's great if you can save some, you can spend some, and if you can give some. Thanks, everybody.