Year-End Charitable Giving Strategies to Lower Your Tax Bill

As the end of the year approaches, business owners and families are finalizing their financials, preparing for the tax season, and often asking the same question: What can I do now to reduce my tax bill before December 31?

At Ensign Partners, our tax specialists are frequently asked to help business owners and individuals develop strategies that reduce tax liability. If you are in that camp, you cannot afford to wait any longer to decide how you are going to achieve that.

If you itemize deductions, one of the most effective strategies is charitable giving. Done strategically, your generosity can provide meaningful tax savings while supporting the causes and communities you care about. But not all giving is created equal. The type of asset you donate, the timing of your gift, and the way you structure your contribution can all affect the size of your deduction.

Here are key strategies to consider as you evaluate your year-end giving.

1. Take Advantage of Cash Donations

Cash remains the most straightforward way to give. Gifts made to qualified charities by December 31 are deductible for the 2025 tax year. For most individuals, cash donations are deductible up to 60% of adjusted gross income (AGI).

For example, if your AGI is $200,000 and you make $100,000 in cash contributions, you may deduct the full $100,000. If your giving exceeds the 60% limit, you may be able to carry the excess forward to future years.

Even if you don’t itemize every year, making a significant gift at year-end could make itemizing worthwhile, particularly for business owners with higher taxable income.

2. Donate Appreciated Assets

Instead of writing a check, consider donating appreciated assets such as stock, mutual funds, or cryptocurrency that you’ve held for more than one year. When you donate these assets directly to a qualified charity:

• You receive a charitable deduction for the fair market value of the asset, regardless of your basis.
• You avoid paying capital gains tax on the appreciation — forever.

For example, if you purchased stock for $10,000 that is now worth $50,000, donating the stock allows you to deduct $50,000 while avoiding ever having to pay capital gains taxes on the $40,000 increase in value. This strategy is significantly more tax-efficient than selling the stock and donating the cash proceeds and can reduce your taxable income.

3. Use a Donor-Advised Fund (DAF)

A donor-advised fund is a charitable investment account, particularly useful for high-net-worth individuals who commonly engage in charitable giving. Contributions of cash or appreciated assets made before December 31 lock in an immediate tax deduction, even if the funds are not distributed until later years.

A DAF is especially useful if:

• You want the deduction now but need more time to choose your preferred charities.
• You’re considering “bunching” contributions into one year to exceed the standard deduction.
• You want to donate appreciated securities in a streamlined way.

With a DAF, you maintain flexibility while maximizing tax benefits.

4. Consider Qualified Charitable Distributions (QCDs)

For individuals age 70½ or older, Qualified Charitable Distributions (QCDs) are one of the most powerful giving tools available. With a QCD, you can transfer up to $105,000 per year (the 2025 limit) directly from your IRA to a qualified charity.

QCDs count toward your required minimum distributions (RMDs) but are not considered taxable income. This can reduce your overall tax exposure, help keep you in a lower tax bracket, and potentially reduce Medicare premium surcharges.

5. Don’t Overlook Non-Cash Contributions

Non-cash gifts such as household items, clothing, vehicles, and even real estate can qualify for charitable deductions. To maximize these benefits:

• Ensure donations are made to qualified charitable organizations.
• Keep detailed records, including receipts and fair market value statements.
• Obtain qualified appraisals for any non-cash donation worth more than $5,000.

When documented properly, these types of contributions can deliver significant impact and tax advantages.

6. Plan Strategically Across Years

The new One Big, Beautiful Bill Act (OBBBA) introduces a meaningful update: beginning in 2026, non-itemizers may deduct up to $1,000 ($2,000 for couples) in cash gifts to charity. While positive, higher-income families will still benefit most from more strategic giving approaches.

One popular strategy is “bunching” contributions — combining several years’ worth of gifts into a single year to exceed the standard deduction, then taking the standard deduction in the off years. This approach can maximize the value of your charitable deductions.

Bringing It All Together

Charitable giving is about more than tax savings; it’s about aligning your financial resources with your values and creating meaningful impact. By approaching it strategically, you can support the causes that matter most while also lowering your year-end tax bill.

At Ensign Partners, we help business owners and families evaluate all available options — from cash gifts and appreciated stock to advanced tools like donor-advised funds and QCDs. Our integrated advisory model ensures that charitable giving is coordinated with your broader legal, financial, insurance, and tax strategies.

If you’re considering year-end donations, don’t wait. Contact Ensign Partners today to create a long-term financial plan that maximizes both your charitable impact and your tax benefits.