4 Ways to Give More to Charity and Less to the IRS

Gift appreciated assets instead

One of the easiest charitable giving strategies is simply donating appreciated assets like stocks, mutual funds, real estate, or even art, you may eliminate capital‑gains tax on the assets and still claim a charitable deduction at fair market value. With capital-gains taxes reaching as high as 20%, this strategy could save you a fair amount at the end of the year vs. selling the assets yourself, meaning you can give even more to your charities of choice!

Turn required minimum distributions into qualified charitable distributions

Starting at age 73 (or 75 for those born after Jan. 1, 1960), you may be required to withdraw a certain percentage every year from your traditional IRA, SEP IRA, SIMPLE IRA and other retirement accounts via required minimum distributions (RMDs), which can drive up your taxable income.

If you qualify to make qualified charitable distributions (QCDs), you can fulfill up to $108,000 of your yearly RMD (2025) by giving back. By donating directly from your retirement accounts, you avoid the extra taxable income, increasing the amount of your donation by as much as your income tax rate, which can be as high as 37%.

This strategy does not allow you to take a deduction for your donation, but instead eliminates the amount from your taxable income entirely.

According to BMM Director of Financial Planning Zack Marcotte, CFP®, this charitable giving strategy has benefits beyond income tax savings. “Because your other tax rates, deductions, and credits are typically based on adjusted gross income (AGI), swapping RMDs for QCDs can potentially lead to more deductions and credits, and lower tax rates across the board.”

Use a donor-advised fund to claim deductions now and give for years to come

If you’re selling a business, receiving an inheritance, or downsizing your home, you may be expecting a large, one-time payment that can push you into a significantly higher tax bracket (and impact how much you pay for Medicare). Charitable giving can help offset that large influx of taxable income, but what if you don’t want to make a large, one-time gift?

A donor-advised fund allows you to take deductions today and make gifts tomorrow. Once you transfer assets to the fund, that money grow can tax-free until it is disbursed to your chosen charities.

Give it all away with a charitable remainder trust

Similar to a donor-advised fund, a charitable remainder trust (CRT) allows you to deduct income from your taxes now and make gifts later. Unlike a donor-advised fund, contributions to a CRT are only partially tax deductible, and with a CRT, the trustee draws an income from the trust over the course of their life. When the trustees have passed away, the remaining balance of the charitable remainder trust are donated to pre-determined charities.

Berkshire Money Management helps philanthropically-minded neighbors give generously without worrying about running out of money through strategic charitable giving. If you’re ready to learn more about how you can increase your impact and reduce your taxes, let’s talk!