Stelter’s Senior Gift Planning Consultant, Lynn Gaumer, J.D.,CAP®, is in with important information your nonprofit needs to know as a new administration begins in Washington.
As 2025 unfolds with a new Republican administration in place, many experts believe there’s a strong chance that key provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 will be extended before they expire at the end of the year. What does that mean for charitable giving?
The TCJA brought significant changes to the tax landscape in the United States, affecting nonprofits, individuals and businesses. Some provisions of the act were permanent, but others had expiration dates.
Among those provisions with a countdown clock: significant individual and estate tax provisions. That clock hits zero on December 31, 2025, and tax law would revert to pre-TCJA rules on January 1, 2026.
But that seems unlikely. President Trump has said he would like to address tax policy in his first 100 days. And according to an Ernst & Young study released by the National Association of Manufacturers, inaction could cost the U.S. economy more than $1 trillion with an estimated 5.9 million American jobs lost.
What would new tax policy look like? It may look very similar to what it is now, as President Trump has said he would like to make many of the existing rules permanent. But this would come at a cost. The Congressional Budget Office forecasts the price of extending individual income tax provisions of the TCJA at nearly $5 trillion over the next 10 years.
Fundraisers should pay close attention to these potential shifts in tax policy. Today, I will break down what’s at stake, review what’s changed under the TCJA and explore what your nonprofit needs to keep in mind as tax policy continues to evolve.
Tax Legislation Comparison: Past, Current and Proposed
| Pre-TCJA | Current Tax Code | Trump-Proposed Tax Legislation | |
|---|---|---|---|
| Income tax rates (%) | 10, 15, 25, 28, 33, 35, 39.6 | 10, 12, 22, 24, 32, 35, 37 | Permanently extend current rates |
| Standard deduction | $6,350 for single filers, $9,350 for heads of households, $12,700 for married couples filing jointly | For 2025: $15,000 for single filers, $22,500 for heads of households, $30,000 for married couples filing jointly | Permanently extend the higher standard deduction |
| Itemized deductions | Common itemized deductions included: • State and local taxes (SALT), including income or sales taxes and property taxes • Mortgage interest on qualifying home loans • Medical expenses that exceeded a certain percentage of adjusted gross income (AGI) • Charitable contributions to qualified organizations • Unreimbursed job-related expenses | Retains the charitable deduction but limits mortgage interest deduction and SALT deduction. Limits or eliminates a number of other deductions | Either increase or eliminate the $10,000 SALT cap |
| Cash contributions | Limited to 50% of AGI | Limited to 60% of AGI | Permanently extend the 60% of AGI limit |
| Estate tax exemption | $5.49 million for individuals, $10.98 million for married couples | For 2025: $13.99 million for individuals, $27.98 million for married couples. Maximum estate and gift tax rate is 40% | Permanently extend exemptions and reduce rates |
| Corporate tax rate | 35% | 21% | 15% (but only for corporations that make their products in the U.S.) |
Challenges and Opportunities for Nonprofits
The Impact of the TCJA
A permanent continuation of the TCJA poses challenges for charities. It nearly doubled the standard deduction, causing the percentage of taxpayers itemizing deductions to plummet because of the reduced tax incentive for charitable contributions. According to The Chronicle of Philanthropy, the implementation of the TCJA “cost charities $20 billion in donations in 2018, the year it went into effect, according to a working paper from the National Bureau of Economic Research, a think tank in Cambridge, Mass. While the research only looks at 2018, it projects $16 billion of that charitable giving loss was permanent and did not return in subsequent years.” Now only about 10% of taxpayers itemize their deductions.
A Path Forward
But help may be on the way. On Giving Tuesday last year, the Charitable Giving Coalition (CGC), supported by over 470 charitable and nonprofit organizations from all 50 states, called on Congress to restore the universal charitable deduction and pass the Charitable Act. This law would allow taxpayers who take the standard deduction to deduct charitable contributions up to one-third of the standard deduction (roughly $5,000 for individuals and $10,000 for joint filers).
This would be a huge win for the charitable community. According to Giving USA, giving by individuals has declined in recent years. When Congress created the temporary universal charitable deduction in 2021 and 2022 (under the CARES Act), 43.2 million taxpayers used the universal deduction. It helped generate $10.9 billion for charities.
The Charitable Act would make giving incentives fair for all taxpayers and strengthen and expand charitable giving. Make your voice heard! Contact your representatives in Congress to support this legislation.
Actionable Insights for Fundraisers
Fundraisers can play a crucial role in helping their supporters understand how tax policy changes might affect their giving. Here are four ways you can help:
- Keep updated on the changing tax landscape. The National Association of Charitable Gift Planners offers free advocacy updates about four times per year. The next advocacy update is February 20. Registration coming soon! You may also find information at conferences or through your local planned giving council.
- Understand tax-efficient giving strategies. Discuss options such as gifts of appreciated property, donor advised funds, charitable trusts and qualified charitable distributions from IRAs. These strategies can help donors optimize their giving while managing their tax liability.
- Stay focused on your expertise—don’t offer tax or financial advice. If your supporters have questions about how they will be affected by potential tax changes, encourage them to collaborate with their financial advisors to devise plans that align with their philanthropic goals and financial circumstances.
- Focus on enduring gift vehicles.
- Gifts in wills and trusts: These continue to be the most popular gift vehicle because of their ease and flexibility. A report from Sea Change Strategies, highlighted in The Chronicle of Philanthropy, found that 31% of midlevel donors have made a bequest and 23% are considering it. The report defines midlevel donors as those who give $1,000 to $10,000 annually. The lion’s share are either baby boomers (61%) or members of the silent generation (21%). The survey found most midlevel donors connected with their favorite causes when they were young: 72% engaged with their cause by the age of 39! This is great research to use when developing your planned giving marketing program.
- Beneficiary designations: These provide donors with a simple yet impactful way to leave a lasting legacy. By naming your organization as a beneficiary of their retirement accounts or life insurance policies, donors ensure that their support continues long into the future. And with nearly $38 trillion (and growing) held in retirement accounts, there is a golden opportunity to highlight these gifts in your marketing material. Remember to encourage donors to notify you of their gift so you can collect the proceeds in a timely, hassle-free manner.
- Gifts of appreciated assets: The Dow Jones Industrial Average hit an all-time high in 2024. Donating appreciated stock can be a way to increase the value of a donor’s gift. When donors give stock, they generally don’t have to pay capital gains tax and qualify for an income tax deduction for the full fair-market value. Also, Dr. Russell James found that nonprofit organizations consistently receiving gifts of stocks or bonds grew their contributions six times faster than those receiving only cash.
- Qualified charitable distributions (QCDs): For many Americans, retirement plan assets represent one of their largest sources of wealth. With added tax advantages, QCDs continue to be popular for those 70½ and older to transfer up to $108,000 in 2025.
- Donor advised funds (DAFs): DAFs are projected to outpace overall philanthropy in growth, as more donors turn to them for their flexibility and tax advantages. Contributions to DAFs have surged, highlighting their increasing popularity and sustained appeal among charitable givers.
- Charitable gift annuities (CGAs): Rates on CGAs will likely remain at 17-year highs for at least the first half of 2025, making them a popular giving option. Higher rates mean more income for retiring baby boomers. (And get this: Over 4 million boomers were set to retire in 2024, according to a study from Fidelity Charitable.)
The Road Ahead
While tax policy remains uncertain, nonprofits must adapt and stay proactive. By understanding legislative changes, educating donors and leveraging effective giving strategies, fundraisers can continue to inspire generosity and sustain vital missions.
Now is the time to strengthen your donor relationships and amplify your planned giving efforts. The resilience of the charitable sector depends on our ability to navigate uncertainty with confidence, creativity and purpose. Together, we can turn challenges into opportunities and ensure a brighter future for the causes we champion.
Thanks for the summary and blog post, Lynn!