What is the story about?
What's Happening?
Financial professionals are being encouraged to guide clients in maximizing charitable giving strategies before significant tax provisions change at the end of 2025. A recent webinar by NAIFA and the American Cancer Society highlighted the urgency due to the expiration of several provisions from the Tax Cuts and Jobs Act. After December 31, 2025, taxpayers who itemize will only be able to deduct charitable contributions exceeding 0.5% of their adjusted gross income. Corporate charitable deductions will also face new limitations, affecting contributions exceeding 1% of taxable income. Experts suggest using donor-advised funds and charitable remainder trusts to align financial and philanthropic goals.
Why It's Important?
The upcoming changes in tax law could significantly impact individuals and corporations that make large charitable contributions. Financial professionals have a unique opportunity to educate clients on these changes, helping them to plan effectively and maximize their tax benefits. By acting now, clients can lock in deductions and align their charitable contributions with broader financial goals, such as reducing Medicare premiums and estate tax exposure. This proactive approach not only supports clients' financial well-being but also enhances their ability to make a lasting philanthropic impact.
What's Next?
Financial professionals are advised to start conversations with clients early to explore complex strategies like trusts or structured gifts. Waiting until late 2025 may limit options, making it crucial to act now. Professionals who lead during this period of change can provide significant value to their clients and communities, ensuring that charitable planning is both strategic and emotionally fulfilling.
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