Can I Still Benefit with Charitable Giving with the Increased Standard Deductions?

In 2019, the standard deduction rose to $12,200 for individuals and $24,400 for married couples filing jointly, nearly double the pre-tax reform standard deduction in 2017. Tax reform made the number of households itemizing their deductions drop significantly—from about 37 million to an expected 16 million in 2018. However, many taxpayers still are able to itemize their tax deductions.

If you’re in the latter group, with deductions totaling well over $12,200 (or $24,400 if you file jointly), your charitable deduction likely remained the same. But if you itemized your deductions in the past, and now instead take the standard deduction, you no longer receive a specific tax benefit for charitable giving.

One tax strategy is called “bunching” of deductions. This is when you surpass the itemization threshold by bundling together your tax deductions into a single year, and then take the standard deduction in interim years. This requires careful and intentional timing of expenses you want to deduct.

While you can mix and match any deductions to reach the threshold, charitable giving is an easy lever to pull to put you over the top. Accelerating your giving and donating two years of contributions in one year can go a long way to helping you reach the threshold. It can also help you give more to charity and save more on taxes in the long run.

If you “bunch” your charitable deductions by making two years’ worth of contributions in one year, your itemized deductions could exceed the standard deduction.

Donors who have variable income or the flexibility to defer or accelerate income can take advantage of this strategy for potentially greater tax efficiencies.