Key Tax Considerations for 2025 Charitable Giving
As 2025 winds down, now is the time to review your charitable giving strategies. Recent updates to tax law may influence how you think about saving and giving. Here are a few highlights to keep in mind this year:
The Required Minimum Distribution (RMD) Age
The age at which retirees must begin taking taxable withdrawals remains 73, with a scheduled increase to 75 in 2033. However, the age at which an IRA owner may make a tax-free gift from their IRA has not changed — that remains 70½.
Qualified Charitable Distributions (QCDs)
For 2025, the annual limit for QCDs has increased to $108,000 per person, up from $105,000 in 2024. This amount is now indexed for inflation each year.
QCDs allow individuals age 70½ or older to transfer funds directly from their IRA to a qualified charity, avoiding the need to report the distribution as taxable income. This is one of the most tax-efficient ways to support Seacrest seniors while also satisfying all or part of your annual RMD.
One-Time QCD Option To Fund a Gift that Pays You
If you are 70½ or older, you can now fund a charitable gift annuity or charitable remainder trust by making a one-time election of up to $54,000 (without being taxed on the distribution) from your IRA during a single calendar year.
A gift annuity allows you to make a gift to a qualified charitable organization and receive lifetime payments to boost your retirement income or provide a lifetime payment for you or your spouse.
With today’s higher payout rates, it is an excellent time to consider this strategy that provides income for life while also creating a lasting impact.
New IRS Reporting for QCDs
Beginning in 2025, the IRS has introduced a new reporting code (Code Y) on Form 1099-R to designate QCDs. This change will make reporting easier and provide greater clarity for both donors and the IRS.
Standard Deduction Considerations
The standard deduction for 2025 is $14,600 for single filers and $29,200 for married couples filing jointly. Because fewer taxpayers itemize, many donors use a strategy called “charitable bunching.” By combining two or more years of giving into a single year, you may increase your deductions above the standard deduction threshold and maximize your tax benefits.
Estate & Gift Tax Exemption – Sunsetting Ahead
In 2025, the federal estate and gift tax exemption is at a historic high of $13.61 million per person (or $27.22 million for married couples). However, this exemption is scheduled to sunset at the end of 2025, potentially reducing the amount a person can transfer tax-free by about half. Donors with larger estates should review their plans now to take advantage of today’s higher limits.
Step-Up in Basis for Inherited Assets
For 2025, heirs who inherit appreciated assets such as real estate or stocks will generally still receive a “step-up in basis,” which can reduce capital gains tax when the asset is sold. For many families, combining this rule with charitable giving strategies can make a significant difference in tax efficiency.
Inherited IRA Rules – The 10-Year Distribution Requirement
Recent law changes (the SECURE Act) require most non-spouse beneficiaries (like adult children or grandchildren) to withdraw the entire balance of an inherited IRA within 10 years of the original owner’s death.
- This often results in a higher tax burden for heirs, since withdrawals can push them into higher tax brackets.
- Spouses still have more flexibility — they can roll an inherited IRA into their own.
- For donors who don’t need their retirement savings personally, naming Seacrest Foundation as an IRA beneficiary is a powerful way to give. Retirement assets left to charities are not taxed at all, making this one of the most tax-efficient legacy gifts.
Let’s Talk!
We would be delighted to help you explore how these updates may fit into your giving plans. Please contact Robin Israel at (760) 516-2018 or risrael@seacrestfoundation.org to learn more about making a difference for Seacrest seniors in need.
