It happens all the time. It’s Saturday. The closet gets cleared out, and suddenly there’s a mountain of clothing that can only be described as “aggressively 2014.” Everything gets bagged up, dropped at the local donation center, and a small slip of paper is handed over.
That little receipt goes into the glove compartment, and the warm glow sets in. “Doing good,” the thought goes. “And getting a tax deduction.”
Then tax season rolls around, and that same slip gets presented with confidence. At that moment, someone on our team gets the joyless job of pouring cold, bureaucratic reality on the warm fuzzies.
That receipt for “three bags of men’s clothes”? Wonderful gesture. Worth nothing on a tax return.
The culprit isn’t generosity. It’s the 2017 tax overhaul.
The Great Wall of the Standard Deduction
Before 2018, lots of taxpayers itemized deductions. Mortgage interest, unlimited state and local taxes, and charitable gifts all got tallied up.
Then the Tax Cuts and Jobs Act arrived and unleashed a massive standard deduction. For 2025:
- Single: $15,750
- Married Filing Jointly: $31,500
These are large, automatic deductions that require no receipts. Taxpayers can either take the standard deduction or itemize. Never both.
Which means charitable gifts only matter tax-wise if total itemized deductions rise above that $15,750 or $31,500 threshold. For about 90 percent of Americans, they don’t. The standard deduction wins every time.
Generosity still counts. Just not on Form 1040.
The Rare Breed: Actual Itemizers
Some taxpayers still itemize. They tend to have:
- A large mortgage
- High state taxes
- Significant charitable giving
- Or planning strategies involving the new $40 thousand State and Local Taxes cap
Once someone crosses into itemizer territory, the rules shift.
Cash donations are simple.
Cash gifts can be deducted up to 60 percent of adjusted gross income (AGI). Donating half a paycheck is uncommon, but fully allowed.
Non-cash donations are where things get awkward.
The IRS requires deductions to use fair market value (FMV). That’s not the purchase price or sentimental value. It’s what a willing buyer would pay in a neutral transaction. This describes exactly none of the world’s garage sales.
The rules:
- Every donated item must be listed and valued.
- Over $500? File Form 8283.
- Over $5,000? A written appraisal is required.
- The trip to drop the items off? Deductible at 14 cents per mile.
It’s not exactly a windfall.
The Smart Strategies for Charitable Giving
Two approaches deliver the biggest tax benefit.
1. Bunching Donations
If someone gives, say, $5,000 annually, they’ll never beat the standard deduction. So they bunch:
- 2025: Give $0
- 2026: Give $0
- 2027: Give $15,000
The first two years use the standard deduction. The third year itemizes. It’s strategic, simple, and effective.
2. QCDs for Those 70½ and Older
This is the most powerful tool for retirees.
A Qualified Charitable Distribution (QCD) lets money go directly from an IRA to a charity. For 2025, taxpayers can donate up to $108,000 this way.
Why it’s so valuable:
- It doesn’t count as income
- It lowers AGI
- It satisfies the required minimum distribution (RMD), even though RMDs begin at 73 years old and QCDs begin at 70½
- Lower AGI protects against higher Medicare premiums and other stealth taxes
Excess charitable deductions can be carried forward for five years.
Cleaning out the closet is still a good move. Donating is still the right thing to do. But most taxpayers won’t see a deduction unless their itemized totals beat the standard deduction. Smart planning can change that. And when tax strategy matters, the right timing and structure can make generosity go further than 14 cents a mile.
