This Month's Harvest:
TAX CONSIDERATIONS FOR CHARITABLE PLANNING IN 2025
[ Advisors Edition ]
Now is the best time to consider charitable trust planning because significant changes in U.S. tax law are set to take effect starting in 2026, most notably through the “One Big Beautiful Bill” (OBBB) Act. By acting in 2025, donors and families can take advantage of existing, more favorable tax rules—particularly higher deduction limits and more generous treatment of charitable gifts—while aligning their estate and philanthropic goals under current regulations.
Immediate and Upcoming Tax Advantages
Charitable trusts currently offer substantial tax deductions, including immediate removal of assets from your taxable estate, reduction of capital gains tax on appreciated assets, and income tax benefits. Starting in 2026, new laws will introduce a 35% cap on itemized deductions and require charitable giving to exceed 0.5% of Adjusted Gross Income (AGI) before qualifying for deductibility, making high-value giving less efficient for top earners.
Control, Predictability, and Flexibility
Charitable trusts provide more control over how charitable gifts are distributed, can support causes for many years, and guarantee predictable income streams for nonprofits and beneficiaries. This makes them especially valuable now, while donors can lock in long-term planning under current rules.
Rising Estate and Investment Pressures
Ongoing asset inflation mean that trusts are vital for minimizing estate taxes, avoiding probate, preserving wealth, and adapting to increasingly complex family circumstances and cross-state inheritance challenges. Planning ahead protects assets and future-proof your strategy against upcoming legal changes.
Tax Strategies for 2025
Charitable trusts that make large, strategic gifts will retain valuable tax benefits, but those planning to make smaller gifts or spread gifts across multiple years should carefully consider the impact of the 0.5% AGI floor and the new deduction cap. 2025 is an ideal year to accelerate charitable giving and trust funding under current, more favorable rules before the new limitations take effect
Personalized Impact
What this means for you: If you are considering a charitable trust, making gifts or establishing trusts in 2025 will help you secure better tax outcomes and maintain the flexibility and control you want over your legacy. Acting now safeguards your philanthropic intentions and maximizes the financial benefits before less favorable laws take effect next year.
