Why giving this year means bigger tax savings

The season of giving is approaching fast—and with it, that December 31st deadline to account for 2025 charitable giving on your taxes. It has many of our supporters asking about how the new tax rules could affect their giving plans.

In short, NOW is the time to give! New changes taking effect in 2026 mean that donations this year not only build stronger communities through affordable homeownership—they also mean greater tax savings for you.

What’s changing?

The new tax rules signed into law over the summer made substantial changes to charitable giving. When and how you donate matter now more than ever. While we always encourage you to discuss the tax implications of your giving with a tax professional, here are some considerations to be sure you're prepared for the new tax laws.

Do you itemize your deductions?

Bear in mind these three things:

• Starting in 2026, your charitable donations won’t qualify for a deduction until they exceed 0.5% of your adjusted gross income (AGI). For example, if you make $100,000 in AGI, the first $500 in donations aren’t deductible. What does this mean for your giving? You should consider accelerating your giving in 2025, before the new laws take effect. That way, you can maximize your tax deductions, qualifying for the FULL amount of your charitable gifts.
• The standard deduction is also going up next year (up to $15,750 for single filers and $31,500 for joint filers). Plus, taxpayers 65 and older will be eligible for an additional $6,000 standard deduction. That means if you give before December 31, 2025, you'll have a lower barrier to itemizing your deductions. You might consider "bunching," a strategy that many donors use to group several years' worth of donations into one—a tax-smart avenue that could be useful in this and future years.
• The laws also set a new limit for top income earners. Currently, those in the highest tax bracket of 37% receive a 37-cent tax benefit for every dollar they deduct through charitable giving. Starting in 2026, they will be limited to 35 cents on the dollar. If you’re in this tax bracket, consider giving more by this year’s December 31 deadline to take advantage of greater tax savings.
  

Do you take the standard deduction?

What’s not changing?

More and more, savvy donors are discovering new ways to give instead of writing a check. There are plenty of tax-smart strategies for giving, regardless of the tax year!

• Giving appreciated assets that you’ve owned for longer than one year—stocks, cryptocurrency, property that no longer serves you—provides additional tax incentives regardless of whether you itemize your deductions or take the standard. By donating these assets directly to a charity, you avoid capital gains tax, and the full value goes toward making a difference in your community. If you do itemize, you may also qualify for a deduction for the full market value.

• For individuals 70½ years and older, one of the smartest ways to give is by making a qualified charitable distribution (QCD) directly through their IRA. Particularly if you’re 73 or older and have a Required Minimum Distribution, these gifts can reduce taxable income, which may also help lower your Medicare premiums and decrease the amount of Social Security subject to tax.

While it’s important to understand how your charitable giving affects your taxes come year-end, the greatest benefit comes from knowing that you have made a profound difference. Tax deductions aside, this time of giving is a time to reflect on the transformative impact your generosity can have in your community.

Consult your tax professional for a giving plan that’s right for you. And in the meantime, to learn more about tax-smart giving and how your philanthropy contributes to Habitat’s mission, please visit habitatebsv.mylegacygift.org, or reach out to me:

Lisa Amor, Giving Officer

(408) 273-7196

LAmor@HabitatEBSV.org