Navigating the Changing Tax Landscape: What’s Next for Charitable Giving?

As a new year begins, so does the possibility of potential legislative changes, including some that could impact charitable giving. Staying informed is a large part of your role in advising philanthropic clients effectively, especially as we approach 2025 and the sunset of key provisions in the Tax Cuts and Jobs Act (TCJA) of 2017.

Here’s what you need to know to help your clients navigate the evolving tax landscape in 2025 and beyond.

The Legacy of the TCJA

The TCJA introduced sweeping tax reforms that reshaped charitable giving patterns in the United States. While intended to simplify the tax code and boost the economy, these changes had unintended consequences for philanthropy:

Lower Tax Rates Across the Board

By reducing individual income tax rates, the TCJA decreased the tax savings associated with charitable donations. For many, the incentive to give was diminished as the financial benefit became less impactful.

Higher Standard Deduction

The near doubling of the standard deduction to $15,000 for single filers and $30,000 for married couples filing jointly (set for 2025) significantly reduced the number of taxpayers itemizing their deductions. With fewer individuals able to claim charitable deductions, overall giving took a hit. In fact, research estimates a $20 billion drop in charitable donations in 2018, the first year the TCJA was in effect.

Increased Estate Tax Exemption

The TCJA also roughly doubled the estate tax exemption, which reached $13.99 million per person for 2025. With fewer estates subject to tax, tax-driven charitable bequests have become less common. For many wealthy individuals, the higher exemption eliminated the need to use charitable contributions as an estate-reduction strategy.

These changes demonstrate the influence tax policy has on giving, especially those motivated by financial incentives. However, the TCJA also revealed a deeper truth: for most donors, the decision to give is about more than tax benefits.

Why People Give Charitably

While tax incentives can encourage generosity, studies consistently show that the primary drivers of charitable giving are rooted in personal values and passions. Clients give because they:

Feel a responsibility to give back and make a difference in their communities.
Are deeply connected to specific causes or organizations that resonate with their beliefs.
Want to honor religious, cultural, or ethical commitments.
Experience emotional fulfillment in helping others and strengthening social bonds.

Beyond tax incentives, philanthropy remains a powerful and rewarding way for individuals to leave a legacy and support causes they care about. For advisors, it’s essential to recognize these motivations and frame charitable planning discussions in ways that align with clients’ values—not just their financial strategies.

The Future of Charitable Tax Policy

As 2025 approaches, the expiration of the TCJA provisions creates uncertainty about the future tax environment. Understanding potential scenarios is key to preparing clients for what’s next:

Extension of Current TCJA Provisions

If Congress extends the TCJA, the higher standard deduction and estate tax exemption will remain in place. Charitable giving patterns are likely to continue as they are today, with significant tax benefits concentrated among ultra-affluent donors. The broader population, however, may remain less incentivized to give due to the inability to itemize deductions.

Reversion to Pre-TCJA Rules

Should the TCJA provisions expire without replacement, the tax code would revert to pre-2017 rules. This shift could reinvigorate charitable giving, as more taxpayers would itemize deductions and benefit from higher marginal tax rates. Additionally, a reduced estate tax exemption would create stronger incentives for wealthy clients to pursue charitable bequests and lifetime giving strategies.

Introduction of New Tax Legislation

Proposed policies, such as the Charitable Act, aim to reshape the philanthropic landscape. This legislation seeks to establish a universal charitable deduction, making tax benefits accessible to all taxpayers—not just those who itemize. By broadening incentives, measures like this could encourage a more equitable and widespread culture of giving.

Practical Tips for Advisors in Uncertain Times

Although the exact legislative outcomes remain unclear, there are steps you can take now to guide your clients through this period of uncertainty:

Encourage Multi-Year Planning: Help clients develop flexible charitable giving strategies that can adapt to changing tax laws. Multi-year gifting plans, including donor-advised funds, can provide tax-efficient options regardless of future developments.
Focus on Non-Tax Motivations: Emphasize the emotional and societal benefits of philanthropy. Reinforce that charitable giving is about creating meaningful impact—not just reducing taxes.
Stay Informed: Monitor tax policy updates and communicate regularly with your clients about how changes might affect their philanthropic goals. Proactive guidance can build trust and demonstrate your commitment to their success.

At the Athens Area Community Foundation, we understand the complexities of charitable planning. Our team is here to support you with tailored strategies and local expertise that help your clients achieve their philanthropic vision. Whether they’re motivated by personal values, tax benefits, or both, we provide the tools and resources to make their giving meaningful and effective.

As we wait for answers on future tax policies, now is the time to start conversations about charitable goals. Together, we can empower your clients to make a lasting impact—no matter what changes lie ahead.

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