Sadly, in 2023 you’re going not going to be able to deduct any of your charitable gifts on the front of your tax return, as an adjustment to income, anymore. Congress tried it and then dropped it. It might come back someday, but for now, it’s gone. That was for a very minor amount, $300 per person.
For anyone giving substantially more, though, here are some other ways to strategize around giving:
Create a Deadline for yourself. In 2018 tax law changes made itemizing deductions much less likely. One of the ways the tax code changes made not-for-profits more vulnerable is because middle-class people no longer have a deadline to make their gifts. (I don’t know how often people actually calculate the benefit of the tax deduction, but they DO use the end-of-year deadline to get around to making gifts. )
I proposed some new deadlines: I like April 15, because it’s a form of political activism for me to make sure the things that I want funded are funded without using OPM. (My personal ethos resists compelling other people to pay for what I want, and taxation is definitely compulsion.) If that line of thinking works for you, set yourself a deadline of April 15 (or, this year, July 15th). But you could do Giving Tuesday (the day after Black Monday), or your birthday, or some other date — just set one.
Understand your Why. Why give if there’s no tax benefit? Giving benefits the giver. You feel rich. You feel good after doing a good deed. It lifts your mood and improves mental resilience. And you can support causes, organizations, or individuals you believe in and want to see succeed.
Create your Charitable Budget. I’ve noticed eye-rolling when discussing $5,000 gifts. If you tithe, $5,000 is 10% of $50,000. But you don’t have to tithe. More common is giving 3 to 5%. You get to decide how much you give. Don’t decide not to give because you don’t meet a particular rate of giving.
Create your Giving Boundaries. Have a charitable budget and time frame for deadlines. Then you can say “no thanks” to the ones that aren’t yours. If you don’t put boundaries around giving, you’ll subject yourself to the endless maw of need in the world. Give intentionally, and deliberately, so all that good feeling from giving won’t start to turn to guilt or resentment.
Use Charity Navigator or GuideStar to help you choose. Pick a combination of three or four organizations that only you would give to. Make the world a better place because you existed by funding your values. Find the obscure ones without marketing budgets that are doing super important work like preventing children from being sold into sex trafficking (like Destiny Rescue) or that provide housing for the children of impoverished workers so they can find work in the cities of Columbia. Fund small charities without marketing budgets. Want to teach your children to give? Match their gifts—then deduct it yourself.
What else should you know about charitable giving?
Bunch deductions for years in which you’re going to itemize.
Combined with this, use Donor Advised Funds (DAF) if you are giving big gifts, as your church won’t say, “thanks for giving me $2K, I won’t ask again next year.” Instead, give them $1K each year. DAF gets you a deduction in big income years, sort of an IRA for your retirement charitable budget. They’re particularly useful if you have low-basis stock you can use for the gift.
Use Qualified Charitable Deductions (QCD) from IRAs. This is a fantastic trick and anyone who qualifies should ask me about this. (You qualify if you’re over 70.5 years old and you have your own – not an inherited – IRA.)
Have you thought about your charitable giving strategy? Have you shifted how much you gave (or not quite gotten around to giving) because of tax code changes? Researching where you want to give can take a little time, but once you have your strategy in place it doesn’t take long to make a difference.
Originally published April 24, 2020, updated December 6, 2023.