Blog

Tax Changes in 2025: What Advisors Need to Know

Staying ahead of tax policy changes is no small task, and with 2025 approaching, major shifts could impact charitable giving strategies. Many attorneys, CPAs, and financial advisors turn to the community foundation for insights on what’s coming—and how to help clients prepare.

Here’s a quick rundown of three key developments to watch:

Sunsetting Provisions of the Tax Cuts and Jobs Act (TCJA)

Unless Congress acts, several provisions of the TCJA will expire at the end of 2025, reverting tax policies to pre-2017 levels. Key changes that could affect charitable planning include:

• Higher Individual Tax Rates: The top tax rate is set to rise from 37% to 39.6%, which may make charitable deductions more valuable for high-income clients.
• Lower AGI Limit for Cash Donations: The deduction limit for cash gifts to public charities is expected to decrease from 60% of AGI to 50%, which can reduce potential tax benefits.
• Reduced Estate Tax Exemption: The current exemption of $13.61 million per individual (2024) will drop to approximately $7 million, meaning more estates will be subject to federal estate tax. Charitable bequests could become a more important tool for clients looking to reduce taxable estates.

While these changes could definitely impact tax planning, it’s worth noting that new legislation could alter the course before the TCJA provisions officially sunset.

More Options for Charitable Deductions

Efforts to expand charitable incentives are gaining traction in the legislature. The Charitable Act, for example, proposes a universal charitable deduction, allowing taxpayers who do not itemize to still claim a deduction for charitable gifts. If passed, this could expand the appeal of philanthropy across all income levels.

Industry leaders continue to push for policies that encourage giving, and this bill remains one to watch in the coming months.

Navigating the Uncertain Future of Charitable Giving

The 2025 tax “cliff” could end in one of the most significant tax overhauls in decades. Changes to tax rates, deductions, and estate planning rules will likely have ripple effects not only for donors but also for the nonprofits they support.

History has shown that tax policy influences charitable behavior. After the TCJA took effect, charitable giving dropped by an estimated $20 billion due to reduced tax incentives. If new policies limit deductions or increase financial pressure on donors, nonprofits could feel the impact once again.

Moving Forward with Athens Area Community Foundation

As tax laws evolve, the community foundation remains a resource for advisors and their clients. Our team monitors legislative developments and advises on tax-efficient charitable giving strategies. Whether helping clients navigate estate tax changes, maximize deductions, or structure long-term philanthropic plans, we’re here to support you.

Stay informed, stay prepared, and reach out to us to ensure your clients’ charitable goals remain secure—no matter what changes lie ahead.