Why Your 2025 Charitable Gifts Matter More Than Ever
As we approach the end of 2025, many people are unaware that major federal tax changes taking effect on January 1, 2026, will significantly reshape how charitable giving is treated on tax returns. For donors, families, and community partners, this year offers a final opportunity to maximize both tax benefits and impact.
For us at the Mt. Vernon Education Foundation, these changes arrive at a time when local schools are already navigating tighter budgets and rising student needs under Indiana’s SEA-1 funding shifts. Philanthropy has never mattered more.
Here’s what’s changing, why it matters, and how you can make a meaningful difference before December 31.
What’s Changing in 2026
1. A New Above-the-Line Deduction (Standard Deduction Filers)
For the first time, non-itemizers will be able to deduct limited cash contributions:
- $1,000 (single)
- $2,000 (married filing jointly)
Helpful—but not enough for donors making larger gifts.
2. A New 0.5% AGI Floor for Itemizers
This is the big one.
Beginning in 2026, charitable deductions only count after you exceed 0.5% of your adjusted gross income (AGI).
Example:
AGI of $300,000 → first $1,500 of giving is non-deductible.
This change reduces the benefit for many regular and major donors.
3. A Reduced Charitable Deduction Value for Top Earners
If you’re in the 37% tax bracket, all itemized deductions (including charitable contributions) will be capped at the 35% rate.
That’s a $1,000 lost benefit on a $50,000 gift.
4. The 60% AGI Cash-Giving Rule Remains—but Shrinks in Value
You’ll still be allowed to donate up to 60% of your AGI in cash to charities.
However, the new floor and cap will reduce the overall benefit.
Why 2025 Is Your Strategic Window
2025 is the last year before these new rules take effect. If you plan to:
✔ make a significant gift
✔ support a capital initiative
✔ donate appreciated assets
✔ open or fund a donor-advised fund
✔ create a family or legacy gift
You may receive a far greater benefit by completing your gift before December 31.
For many donors, waiting until 2026 could result in thousands of dollars in lost deductions.
Who Should Pay Attention?
This matters most if you:
- Itemize deductions
- Donate $2,500+ annually
- Earn more than ~$200,000
- Plan to make a one-time significant gift in the next 2–3 years
- Are nearing retirement or a liquidity event
- Are required to take IRA distributions
Your Year-End 2025 Action Plan
1. “Bunch” Your Gifts Into 2025
Instead of giving $10,000 per year for the next three years, consider giving $30,000 in 2025.
This allows you to:
- Maximize current rules
- Use the standard deduction in later years
- Avoid the 2026 floor altogether
2. Open or Fund a Donor-Advised Fund (DAF)
A DAF lets you:
- Contribute in 2025
- Take the entire deduction in 2025
- Distribute to charities later
It’s flexible and perfect for donors who want to plan ahead.
3. Donate Appreciated Stock Instead of Cash
If you donate stock you purchased years ago:
- you avoid capital gains tax
- you deduct the full market value
- the charity receives the full value
This is one of the most tax-efficient giving strategies available.
4. Use Qualified Charitable Distributions (QCDs)
If you are 70½ or older, you can give directly from your IRA:
- Up to the indexed annual limit
- Reducing taxable income
- Lowering Medicare costs
- Satisfying RMDs
QCDs remain powerful both before and after 2026.
5. Consult Your Financial Advisor Before December 31
Every individual’s situation is unique. A financial planner or CPA can help you:
- Determine whether bunching makes sense
- Model the 0.5% AGI floor impact
- Decide whether to give cash or appreciated assets
- Evaluate DAF timing
- Integrate giving into retirement and estate planning
How This Connects to Mt. Vernon Students
While federal tax laws are changing, Indiana schools—including MVCSC—are navigating SEA-1, which:
- reduces flexibility in how funds can be spent
- shifts costs to districts
- increases burdens on general operating funds
- limits support for wellness, mental health, trades, and innovative learning
At the same time, student needs are rising:
- mental health support demand
- hands-on learning
- literacy requirements
- career/technical pathways
- STEM and innovation
Philanthropy fills the gap.
Through the Mt. Vernon Education Foundation, your generosity fuels:
- the R.O.C. Factor (Relationships • Opportunity • Connection)
- classroom innovation
- mental health and wellness supports
- trades/career exploration
- literacy and STEM growth
- teacher appreciation and development
- equitable opportunities across the district
Your gift today strengthens the future of 5,000+ students tomorrow.
A Final, Thoughtful Note
The Mt. Vernon Education Foundation does not provide tax or legal advice.
We strongly encourage donors to consult a CPA, tax professional, or financial advisor to determine which strategies best support their financial and philanthropic goals.
Ready to Make a Year-End Gift?
Your generosity today helps ensure Mt. Vernon students continue to learn, grow, and thrive — no matter what changes come in 2026.
Give before December 31.
Give because our kids deserve the very best.
Give to build opportunity, connection, and possibility.
