Is donating appreciated stock better than giving cash?

Often yes. Donating long-term appreciated shares avoids capital gains tax and usually allows a deduction for the full FMV, so the charity may receive more while your after-tax cost can be lower.

Who can use a Qualified Charitable Distribution (QCD)?

IRA owners age 70½ or older can give directly from an IRA to qualified charities (up to the annual limit). QCDs count toward RMDs and are excluded from taxable income.

Do the 2026 tax-law changes affect QCDs?

No—QCDs are excluded from taxable income when done correctly and are not affected by the 2026 changes discussed here (e.g., first 0.5% of income not deductible and potential lower-bracket valuation for higher earners).

How should I time DAF contributions around 2025–2026?

Consider front-loading DAF contributions in 2025 (bunching) to maximize deductions before the 2026 rules (first 0.5% of income not deductible; potential lower-bracket valuation for higher earners). Non-itemizers may benefit from delaying gifts until January 2026 so they can itemize and claim a deduction in that tax year.

Tax-Efficient Charitable Giving

Smart Charitable Giving: Donate Stock, QCDs, CRT & CLT

Give more to charity and keep more in tax savings. This guide covers donating appreciated stock, QCDs, and advanced strategies like CRT and CLT, plus when to use a DAF and smart year-end tactics. 2025–2026 planning note: Leverage 2025 to maximize deductions ahead of the 2026 charitable-deduction rule changes; coordinate grants into 2026 and beyond.

At a glance: For non-itemizers, consider delaying gifts to January 2026 to capture a deduction. For itemizers, consider front-loading a DAF in 2025 (bunching) since in 2026 the first 0.5% of income is not deductible and higher earners may see deductions valued at a lower marginal bracket.

Why start with tax-efficient charitable giving?

Planned philanthropy lets you support causes you value while coordinating cash flow, investment strategy, and taxes. By choosing the right vehicle—donating appreciated stock, QCDs from IRAs, DAFs, or trusts like CRTs and CLTs—you often give more to charity at a lower after-tax cost. Timing matters in 2025–2026.

Watch Ira Koyner explain the full strategy in this video:

Donating Appreciated Stock: High-Impact First Step

How to donate stock to charity—and why it’s powerful

Avoid capital gains tax: Donate shares held > 1 year directly to a qualified charity or DAF.
Deduct fair market value: Deduct FMV (subject to AGI limits), not cost basis.
Rebalance efficiently: Trim concentrated or legacy positions with maximum charitable dollars.

Tip: Ask the nonprofit for brokerage DTC instructions, or contribute to a donor-advised fund (DAF) for easier processing and grant flexibility.

Donor-Advised Fund (DAF): Flexible Grant-Making

When a donor-advised fund DAF shines

Bunching deductions (2025 focus): Consider front-loading contributions in 2025. Starting in 2026, the first 0.5% of income isn’t deductible, and higher earners may see deductions apply at a lower marginal bracket. Front-loading can lock in a larger 2025 deduction while you recommend grants over time.
Invest the balance: Potential tax-free growth for future grants.
Privacy & admin: One receipt for tax filing; option to grant anonymously.

Coordinate the 2025 DAF contribution size with your expected 2025 AGI and state rules to avoid leaving deduction on the table.

Numbers Example: Donate Stock vs. Sell Then Give Cash

Assumptions Market value $50,000; Cost basis $20,000; combined long-term capital gains tax = 31.8% (20% federal + 8% state + 3.8% NIIT). Deduction value assumes a marginal 32% federal + 8% state = 40% combined.

	Donate Shares	Sell, Then Donate Cash
Market value of shares	$50,000	$50,000
Cost basis	$20,000	$20,000
Long-term gain	$30,000	$30,000
Capital gains tax (31.8%)	$0	$9,540
Amount charity receives	$50,000	$40,460
Potential charitable deduction	$50,000	$40,460
Value of deduction (40%)	$20,000	$16,184

Visual: Bigger Gift & Bigger Tax Benefit When Donating Stock Directly

✅ By donating stock directly:
• The charity receives $9,540 more.
• Your tax savings are $3,816 higher.
• Together, this increases your generosity by $13,356.

Assumes long-term holding (>1 year). Capital gains tax = 20% federal + 8% state + 3.8% NIIT = 31.8%. Deduction value at 32% federal + 8% state = 40%. Actual results depend on your situation.

Qualified Charitable Distributions (QCDs)

Qualified Charitable Distribution (QCD) essentials

Who: IRA owners age 70½ or older.
What: Send IRA dollars directly to charity (annual limit per IRS rules).
Why: Counts toward RMDs but excluded from taxable income—helpful for IRMAA and deduction limits.
Note: QCDs can’t go to DAFs, private foundations, or most split-interest gifts.

2026 change impact: QCDs are not affected by the 2026 charitable-deduction rule changes described on this page. Their exclusion-from-income treatment still applies when done correctly.

Year-End Giving Strategies

Simple year-end giving strategies that boost results

Start transfers early: Ensure stock gifts settle pre-Dec 31.
Bunching + DAF (2025): For itemizers, consider over-funding a DAF in 2025 to maximize the deduction before 2026’s first-0.5%-of-income non-deductible layer and potentially lower bracket valuation.
Non-itemizers (timing): If you won’t itemize in 2025, consider holding off until January 2026 so the gift may be deductible in 2026 (subject to AGI limits and new rules).
Rebalance: Use gifts to trim concentrated positions with low tax friction.

Advanced Planning: Charitable Remainder Trust (CRT) & Charitable Lead Trust (CLT)

How a charitable remainder trust CRT works

Income now, charity later: CRT pays you/beneficiaries for life or term; remainder to charity.
Tax benefits: Upfront deduction; appreciated assets can be sold inside the trust without immediate capital gains tax—recognized over time via the four-tier rules.
Best for: Highly appreciated assets + desire for lifetime income and philanthropy.

How a charitable lead trust CLT works

Charity now, heirs later: CLT pays charity first; remainder to heirs.
Transfer strategy: Shift future appreciation with potential gift/estate tax efficiencies.
Grantor vs non-grantor: Grantor CLT gets upfront deduction but reports trust income; non-grantor CLT gets deductions at trust level (no upfront personal deduction).

CRT vs. CLT at a glance

Feature	CRT	CLT
Who receives income first?	Donor/beneficiaries	Charity
Primary goal	Income + philanthropy	Philanthropy + wealth transfer
Typical tax benefit	Upfront deduction; gain deferral within trust	Gift/estate leverage; possible upfront deduction (grantor CLT)
Best for	Appreciated assets; retirement income	High-net-worth estate planning

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