Benefits of Bunching Charitable Gifts in 2025

Published October 31, 2025

With the doubling of the standard deduction made permanent by the One Big Beautiful Bill Act (OBBBA), the number of taxpayers who itemize deductions will continue to be limited. In 2017, approximately 30% of taxpayers itemized. With the increased standard deduction, approximately 10% of taxpayers will itemize this year.

The standard deduction doubled in 2018 to $24,000 for married couples and $12,000 for individuals. The standard deduction for married couples filing jointly is increasing to $31,500 in 2025 and $32,200 in 2026. The standard deduction for individuals in 2025 and 2026 are $15,750 and $16,100, respectively. Taxpayers ages 65 and older are eligible to receive the existing senior deduction of $2,000 for individual filers or $1,600 per qualifying spouse.

For tax years 2025 to 2028, seniors will receive an enhanced deduction of $6,000. The $6,000 deduction phases out at a rate of 6% of the excess amount for single persons with incomes over $75,000 and married couples with incomes over $150,000. The deduction is fully phased out for single persons with incomes over $175,000 and married couples with incomes over $250,000. For tax year 2025, a single senior would have a standard deduction of $15,750, the existing $2,000 senior deduction and an additional $6,000, for a total deduction of $23,750.

What tax planning strategy might benefit generous taxpayers who know there is a large standard deduction and still desire to help a favorite charity? Let us consider the options for two generous families: 1) John and Mary and 2) Harry and Susan.

Both couples pay $8,000 in state and local taxes and $7,000 in home mortgage interest. They give $12,000 to favorite charities each year. Their total itemized deductions are $27,000 per year.

Because the standard deduction is larger than the $27,000 in itemized deductions, John and Mary plan to take the $31,500 standard deduction in 2025 and $32,200 in 2026. Their total deductions over two years equal $63,700.

Harry and Susan decide to “bunch” their charitable deductions. They gave $24,000 in 2025 and plan to give nothing in 2026.  Because their 2025 itemized deductions of $39,000 are more than the standard deduction, they elect to itemize their deductions. In 2026, they take the standard deduction of $32,200. Their total deductions are $71,200.

Bunching Charitable Deductions

By “bunching” their deductions, Harry and Susan increase their tax savings from their charitable gifts. The $7,500 increased deductions may save $2,100 in their 28% federal and state income tax brackets. 

Editor’s Note: If your combined state and local tax, home mortgage interest and charitable gift deductions are close to the married or individual standard deductions, it may be beneficial to visit with a tax advisor about “bunching” your charitable gifts. Making larger charitable gifts every other year could be an excellent tax-saving strategy.

Reminder for Tax Professionals to Renew PTINs

In IR-2025-108, the Internal Revenue Service (IRS) reminds tax professionals that the 2026 renewal period for preparer tax identification numbers (PTIN) is now open. Preparers are required to renew PTINs annually.

There are over 800,000 paid tax preparers who hold a PTIN. An individual is a paid preparer if the individual prepares, assists in preparing or claims refunds for compensation. Paid preparers are required to hold a valid PTIN and must list the PTIN on each prepared tax return.

Enrolled agents, even if they are not engaging in preparing returns, also must annually renew PTINs to maintain active status. PTINs expire on December 31 of the calendar year for which it was issued. The fee to renew PTINs in 2026 is $18.75 and is nonrefundable. The cost is apportioned between $10 for the PTIN fee and $8.75 payable directly to a third-party contractor.

PTINs can be renewed online, which the IRS encourages. Paper renewals are available using Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal, but processing may take six weeks or longer.

To renew your PTIN online, visit IRS.gov/taxpros, locate the “PTIN system” and select the “Renew or register” button. Log in to the online PTIN system and select “Renew my PTIN” from the main menu. Once the process is complete, you will receive confirmation of your renewal.

The online PTIN renewal system now uses a new, secure log in system. The new log in system is ID.me, a trusted technology provider for identity verification. If the individual has a social security number (SSN), ID.me will be the automatic route for verification. Tax preparers will need an ID.me account to access the online PTIN renewal portal. If the tax preparer does not have an SSN, the current sign-in process will be followed.

State Tax Court Denies Deduction

In Copeland v. Dept. of Revenue, TC-MD 240623R, the Oregon Tax Court disallowed the taxpayer’s noncash charitable contributions due to a lack of substantiation as required by Internal Revenue Code Sec. 170. The taxpayer was permitted two cash donations that were substantiated during the proceedings.

Hannah Copeland, an individual taxpayer in Oregon, claimed charitable contributions in the amount of $14,259 on her 2020 individual income tax return. Copeland represented herself in the proceedings. On the 2020 return, the donations reached $159 in cash and $14,100 in noncash contributions. During the proceedings, Copeland produced two checks substantiating $170 in charitable cash contributions.

Copeland offered evidence of the noncash contributions by contemporaneous donation receipts and a personal notebook with recordings of the donation details. Copeland donated the following aggregate valued category of items: $4,425 of clothing, $3,192 of household items, $4,983 of furniture and $1,500 of collectibles. The aggregate values were not challenged. Over 30 items were donated, and the items were possibly purchased as far back as 2009.

Contemporaneous written acknowledgements (CWAs) were provided for all but one donation from the nonprofits that received the items. For the one donation where the receipt included the date and purchase price, the taxpayer failed to provide a CWA from the nonprofit.

The taxpayer’s personal notebook contained a schedule of donation dates and corresponding values for each of the four categories of items donated. Descriptions of the property for each donation date were listed as well. 

The fair market value provided by Copeland was determined based on replacement cost without regard for the condition of the item donated. Replacement cost was based on Facebook Marketplace listings for comparable items. The comparable items were not the same items as those donated and no linking to the donated items was provided for explanation of how the values were determined.

Original receipts were also included but various issues were present such as illegibility, missing purchase dates or item descriptions that were vague or incomplete. Copeland also offered substantiation from screenshots of Amazon shipping notifications, but the screenshots were not linked to particular donations.

Oregon generally follows federal tax provisions including those relating to the substantiation of charitable donations. The taxpayer has the burden of proof when claiming deductions and must prove the right to claim itemized deductions. The Court found that Copeland was unable to prove a right to claim the deductions. Further, the valuation method was inappropriate for charitable contributions.

Under Treasury Reg. 1.170A-16(c)(3)(iv)(D), a taxpayer who claims a deduction for charitable contributions of more than $500 must establish the fair market value of the noncash property. Fair market value is defined as “the price at which the property would change hands between a willing buyer and a willing seller.” Case law has established that the comparable sales method is a better measure for fair market value.

Aggregation value is applied when similar items are donated, which includes “property of the same generic category or type.” Reg. 1.170A-13(c)(7)(iii). Substantiation requirements become more rigorous as the value increases. For donations of $250 or less, the taxpayer must have records for the date of the contribution, the name and address of the nonprofit and a description of the contributed item that is sufficiently detailed. When contributions exceed $250, the taxpayer must also obtain a CWA from the nonprofit organization. Sec. 170(f)(8)(A).

When contributions exceed $500, the taxpayer must substantiate the contribution with a completed Form 8283. Sec. 170(f)(11)(B) and Reg. 1.170A-16(c)(3). Form 8283 requires the fair market value of the property on the date of contribution and the cost basis of the contributed property. Reg. 1.170A-16(c)(3)(iv)(D) and (F). Since each aggregate value category of goods exceeded $500, Copeland was required to provide IRS Form 8283 to substantiate the charitable contributions.

The Court denied Copeland’s deductions for two independent reasons. First, an improper valuation method was used to determine fair market value. Replacement cost was not appropriate for used goods, and the alternate fair market value was not introduced. Second, the taxpayer failed to substantiate the charitable contributions based on the requirements of Sec. 170. Even if the fair market value had been established, the substantiation requirements were not met for the aggregate values of each category of goods. Therefore, based on the findings of the Court, the noncash deductions were denied for the 2020 tax year. Because Copeland was able to establish proof of charitable contributions in the amount of $170 in cash, these deductions were permitted.   

Editor’s Note: The decision serves as a reminder that noncash donations of property require rigorous documentation and realistic valuation of used goods. If any of the aggregate category values exceed $5,000, the taxpayer is required to substantiate the value of noncash assets with a qualified appraisal.

Applicable Federal Rate of 4.6% for November: Rev. Rul. 2025-21; 2025-45 IRB 1 (15 October 2025)

The IRS has announced the Applicable Federal Rate (AFR) for November of 2025. The AFR under Sec. 7520 for the month of November is 4.6%. The rates for October of 4.6% and September of 4.8% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2025, pooled income funds in existence less than three tax years must use a 4.0% deemed rate of return. Charitable gift receipts should state, “No goods or services were provided in exchange for this gift and the nonprofit has exclusive legal control over the gift property.”