4 Charitable Giving Planning Strategies Under the New Tax Law

In the first part of this series, we discussed what actually changed under the new tax law, and why the impact on charitable deductions is often much smaller than it first appears. The new rules don’t eliminate tax‑efficient charitable giving, but they do make intentional strategy more important, particularly for business owners and high‑income households.

Below are four approaches to consider as you plan your charitable giving under the new framework.

Donor-Advised Funds and Bunching Contributions

One of the most effective responses to the new 0.5% adjusted gross income (AGI) deduction floor is bunching charitable contributions into a single year, rather than spreading gifts evenly year‑to‑year.

A donor‑advised fund (DAF) can be a helpful tool in this approach. It allows you to:

• Make a larger charitable contribution in one year.
• Exceed the new deduction floor more meaningfully.
• Take the tax deduction in the year of contribution.
• Continue supporting charities over time through grants.

From a planning perspective, this separates the timing of the tax deduction from the timing of the charitable impact.

For people with fluctuating income, such as business owners, those experiencing liquidity events, or those nearing retirement, this flexibility can be especially valuable. Rather than letting the new floor reduce the benefit of smaller annual gifts, a more deliberate approach can preserve much of the tax efficiency while maintaining consistent support for the causes that matter most.

Donating Appreciated Stock

Another strategy that continues to play an important role is donating appreciated securities rather than cash.

When you donate publicly traded stock that has been held for more than one year:

• You generally avoid paying capital gains tax on the appreciation.
• You may deduct the fair market value of the stock (subject to applicable AGI limits).

For people with taxable investment accounts, this approach can be particularly effective. It often allows you to give more to charity while also reducing the tax cost of rebalancing or diversifying their portfolio.

We frequently see this strategy combined with donor‑advised funds, but it can also be used for direct gifts to qualifying charities. The key is coordinating asset selection with the overall tax picture, especially in years with higher income or realized gains.

Qualified Charitable Distributions (QCDs)

For clients age 70½ or older, qualified charitable distributions (QCDs) remain one of the most powerful charitable planning tools available and they are not impacted by the new charitable deduction floor.

A QCD allows you to:

• Directly transfer funds from an IRA to a qualified charity.
• Count toward required minimum distributions (RMDs).
• Exclude the distribution from taxable income entirely.

Because QCDs never increase adjusted gross income, they can help manage:

• Income tax brackets.
• Medicare premium thresholds.
• The taxation of Social Security benefits.

For charitably inclined retirees, this strategy is often beneficial, especially when RMDs and charitable giving overlap.

Coordinating Giving with Income and Life Events

Under the new rules, income level matters more than ever. Now you should think about charitable giving in the context of:

• High‑income years versus lower‑income years.
• Business growth or exit events.
• Retirement transitions.
• Capital gain recognition.

Rather than approaching charitable giving as a year‑end decision, integrating it into broader tax and financial planning can help preserve flexibility and avoid unintended consequences.

In many cases, the goal isn’t to change how much you give, but to align timing and strategy with opportunity.

What This Means for You

The new tax law hasn’t eliminated charitable planning. If anything, it has made the role of thoughtful planning more visible.

When charitable giving is coordinated with income, assets, and long‑term goals, people can continue supporting the causes they care about without unnecessary tax friction.

If you haven’t revisited your charitable strategy recently, this is a good time to talk with your Kernutt Stokes advisor about how best to plan your charitable giving.

Additional KS Advisor Resources

KS Advisor Video: Tax Deductions
KS Advisor Blog: One Big Beautiful Bill: 10 Considerations for Businesses and Individuals