In our previous posts, we explored how the One Big Beautiful Bill (OBBB) could reshape tax brackets and create new opportunities for Roth conversions. Today, we’re turning to another key area for many retirees: charitable giving.
The bill introduces changes that could impact how—and how much—retirees deduct for their charitable contributions. If giving back is part of your financial and personal goals in retirement, this is a post you’ll want to read closely.
What’s Changing for Charitable Givers?
The Big Beautiful Bill proposes a significant expansion of the standard deduction, particularly for seniors. As context:
- Before the bill: The standard deduction in 2024 was $14,600 for single filers and $29,200 for married couples filing jointly (including the senior deduction if over age 65).
- Under the proposed bill: The standard deduction could increase to approximately $18,000 for individuals and $36,000 for joint filers, with an additional $6,000 per person age 65+, bringing the total to $24,000 (single) or $48,000 (joint) for many retirees.
While this sounds generous—and is intended to simplify tax filing—it also means that fewer people will itemize their deductions. Since charitable gifts are generally only deductible when you itemize, this could unintentionally reduce the tax benefit of giving unless retirees adjust their strategy.
For many, it creates a planning challenge: if you no longer itemize, you may no longer get a tax benefit from giving—unless you adapt your approach., especially for seniors. While that sounds great, it means fewer taxpayers will itemize their deductions—which is currently the only way to deduct most charitable contributions.
For many retirees, this creates a planning challenge: if you no longer itemize, you may no longer get a tax benefit from giving—unless you adapt your strategy.
Three Ways to Give Smarter in This New Landscape
Before the proposed changes, many retirees benefited from itemizing their deductions, especially if they had significant charitable contributions, mortgage interest, and medical expenses. But under the Big Beautiful Bill, with a larger standard deduction and fewer opportunities to itemize, the landscape is shifting. Here’s how you can adapt:
- Qualified Charitable Distributions (QCDs)
- Before: QCDs were already one of the best giving strategies for retirees over 70½, allowing up to $100,000 annually to be donated directly from an IRA to a charity. This amount was excluded from taxable income and counted toward required minimum distributions (RMDs).
- Now: With a larger standard deduction likely preventing many retirees from itemizing, QCDs become even more valuable because they reduce taxable income directly—not through deductions. That means you can still get a tax benefit from charitable giving even if you don’t itemize under the new rules.
- Gift Bunching
- Before: Donors who itemized could deduct charitable gifts each year as long as their itemized deductions exceeded the standard deduction. However, this often meant losing some deduction value in years with lower giving or other expenses.
- Now: With fewer people expected to itemize, “bunching” your charitable gifts—combining multiple years’ donations into a single year—helps exceed the new higher threshold. This allows you to itemize in the “bunched” year and take the standard deduction in other years. It’s a more strategic rhythm for maximizing tax efficiency.
- Donor-Advised Funds (DAFs)
- Before: DAFs allowed donors to make a lump-sum contribution (and receive the full deduction that year), while retaining control over when and how the funds are distributed to charities in the future.
- Now: With potential spikes in income from Roth conversions, capital gains, or other events under the proposed tax law, contributing to a DAF during a high-income year helps reduce your overall tax burden and secures a deduction even if you don’t plan to give all at once. It also creates flexibility for multi-year giving while locking in the tax break now. Qualified Charitable Distributions (QCDs)
- If you’re over age 70½, you can donate directly from your IRA to a qualified charity—up to $100,000 per year—and exclude that amount from your taxable income.
- QCDs count toward your RMD if you’re over 73, and they’re not subject to the standard/itemized deduction rules.
- This is one of the most tax-efficient giving strategies under the proposed bill, especially for retirees who don’t itemize.
- Gift Bunching
- Instead of spreading your donations evenly each year, you can “bunch” two or three years’ worth of giving into one tax year to exceed the standard deduction and itemize in that year.
- In non-giving years, you revert to taking the standard deduction.
- Donor-Advised Funds (DAFs)
- If you plan to give a meaningful amount over time, you can contribute a lump sum to a DAF in a high-income year, take the deduction now, and distribute the funds to charities over time.
- This is especially useful in years when capital gains or Roth conversions may spike your income.
Massachusetts and Boston-Specific Notes
For residents of Massachusetts, charitable deductions can still apply at the state level—even if you don’t itemize federally. In 2023, the state reintroduced a charitable deduction for all taxpayers, regardless of whether they itemize. So even if your charitable strategy no longer yields a federal tax break, it may still help lower your Massachusetts tax bill.
If you live in Boston specifically, it’s also worth noting that while there are no additional city-specific charitable tax deductions, many Boston-area nonprofits and institutions (such as hospitals, universities, and local foundations) are eligible for QCDs and other forms of strategic giving. Giving locally not only supports your community but can be an excellent way to meet both financial and personal goals.
This makes QCDs, donor-advised funds, and bunching strategies doubly important for retirees living in the Commonwealth—especially those in the Boston area who are charitably inclined. at the state level—even if you don’t itemize federally. In 2023, the state reintroduced a charitable deduction for all taxpayers, regardless of whether they itemize. So even if your charitable strategy no longer yields a federal tax break, it may still help lower your Massachusetts tax bill.
This makes QCDs and smart giving strategies doubly important for retirees living in the Commonwealth.
Takeaway: Align Your Giving with Your Tax Plan
Charitable giving is about more than tax savings—but there’s no reason not to maximize the impact of your gifts. With the Big Beautiful Bill likely to change who itemizes and how deductions work, it’s a great time to revisit your approach.
Coming Up Next
In our next post, we’ll explore estate planning and how potential changes to the lifetime exemption amount could affect your legacy plans.
Want help aligning your giving strategy with your tax plan? Let’s talk.
Evergreen Wealth Management provides flat-fee financial planning and investment management to individuals and families preparing for or living in retirement. Based in the Boston area, we specialize in helping clients create tax-efficient retirement income strategies that support the life they want to live.
The information contained herein is for educational purposes only and should not be construed as specific tax, legal, or investment advice. You should consult with a qualified tax professional or financial advisor before making decisions based on the content of this article. Evergreen Wealth Management is not a tax advisor or legal firm. All examples are hypothetical and intended for illustrative purposes only.