Ep. 297 – 2025 – Common Deductible Charitable Gifts in Retirement
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In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss the strategies and rules surrounding common deductible charitable gifts in 2025. As the new year begins, many individuals are setting charitable giving goals while seeking to maximize their tax benefits. From understanding adjusted gross income (AGI) limits to choosing between donating cash, appreciated assets, or qualified charitable distributions, this episode walks you through everything you need to know to make informed decisions.
Listen in to learn about the tax benefits of donations, the importance of choosing the right type of gift, and how to align your charitable goals with your overall retirement plan. Whether you’re donating cash, assets with capital gains, or making qualified charitable distributions, Radon and Murs provide practical advice to help you navigate these options effectively.
In this episode, find out:
· The benefits of donating cash and how AGI limits affect tax deductions.
· How to use donating appreciated assets to avoid capital gains taxes while gaining deductions.
· The rules surrounding qualified charitable distributions (QCDs) for individuals over 70½.
· How to leverage long-term and short-term capital gains in your charitable giving strategy.
· The impact of the 2025 standard deduction on itemizing charitable deductions.
Tweetable Quotes:
· “Charitable giving isn’t just about generosity; it’s about maximizing impact and minimizing taxes.” – Radon Stancil
· “Understanding AGI limits can turn charitable donations into powerful tax-saving tools.” – Murs Tariq
Resources:
If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!
To access the course, simply visit POMWealth.net/podcast.
Here’s the full transcript:
Radon Stancil:
Are you charitably inclined? You’re going to want to listen to today’s episode because we cover a checklist of all the common things you need to know about charitable giving in 2025. We hope you’ve been enjoying all the episodes from Secure Your Retirement. If you’d like to keep learning and receiving these episodes, hit the subscribe button and the bell so you receive alerts when they come out. We’ve helped thousands of listeners get on the path to securing their retirement. Now it’s your turn. Let’s dive in.
Welcome, everyone, to the Secure Your Retirement podcast. We’ve got this little run here that we’re doing at the beginning of the year, trying to get everybody’s minds right around things they might want to think about as you prepare for this new year of 2025. So, what we wanted to talk about in this episode is maybe a charitable plan might be in your thought process.
Radon Stancil:
You might think, “Well, I want to give to some charities this year. I have a plan in place. How much can I actually give away and actually have a tax benefit?” There’s a lot of discussion around this, and we’ve done a couple of different episodes on how to do this the correct way. We’re not going to go into a ton of detail on stacking donations through what are called donor-advised funds, but we do have some clients who say, “Hey, I would like to take advantage of this.”
But then the question comes about, “How much can I do and actually get the benefit from?” There are some rules there, and what we want to do today is take you through different types of investments or things you could donate and how much of your earned income or adjusted gross income, rather, you could deduct. We don’t want to do too much, because if we do too much, we won’t get any benefit. If you just want to give away the money, there are ways to continue to do that.
What we want to do today is walk you through each of these categories so that you can think about this in your overall plan. We’re going to walk you through a few different items line by line, and then you’ll understand how much you can deduct. Let’s start with the first one, which is simply donating cash.
When donating cash, most people think it feels like common sense—”Hey, if I give away a dollar, I should get a dollar of benefit toward that donation.” That’s just not how our beautiful tax system works. There are complications. There’s this thing called AGI, which we’re going to talk about—your adjusted gross income—and how that applies to donations and how much benefit you get.
Cash donations typically involve cash in the bank, written by a check, an EFT, or a wire transfer. You get what’s called a “below-the-line deduction” if you’re able to itemize. That’s a big deal because, in our tax system, you’re doing one of two things: you’re either taking the standard deduction or itemizing.
The standard deduction is roughly $30,000 this year in 2025, depending on your age. This means you take your taxable income, apply the standard deduction, and subtract it from that income. Itemizing means you have other deductions that exceed the standard deduction. For example, you may have $40,000 of itemizations, which is better than taking the standard deduction of $30,000.
Radon Stancil:
When donating cash and itemizing, you can utilize up to 60% of your AGI. Let’s imagine your AGI is $100,000. You can donate up to $60,000 of cash and get a tax benefit for it. This 60% varies by category, which we’ll discuss further.
If you decide to donate cash exceeding the 60% AGI limit, the excess can be carried forward for up to five years. For example, if you donate $100,000 but can only deduct $60,000 in 2025, you can carry the remaining $40,000 forward. However, your standard deduction must be factored in again each year.
Moving on to the next category: short-term capital gains. If you donate assets like stocks or real estate that have appreciated in less than a year, only 50% of your AGI can be deducted. Long-term capital gains, from assets held for over a year, allow for a 30% AGI deduction. For items like art donated to a museum, related use rules apply, and the deduction limit might be 50%.
Finally, let’s discuss qualified charitable distributions (QCDs). QCDs allow individuals 70 ½ and older to donate directly from an IRA to a charity. This avoids taxation on the distribution and counts toward required minimum distributions (RMDs). For example, if your RMD is $20,000 and you donate $10,000 through a QCD, you only pay taxes on the remaining $10,000.
Radon Stancil:
QCDs have an annual limit of $100,000. If you’re charitably inclined, this can be a powerful strategy to maximize your giving while minimizing taxes.
As we enter 2025, there are many strategies to give charitably while being tax-efficient. If you want more details, email us at info@pomwealth.net for our 2025 Common Deductible Charitable Gifts Checklist.
Thank you for listening to today’s episode of Secure Your Retirement. If you’d like to learn more, visit our website at pomwealth.net and check out our Three Keys to Secure Your Retirement online course. Don’t forget to subscribe to our podcast and YouTube channel for more retirement tips. See you next Monday!