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Learn about the generous donors who have established charitable funds through Stark Community Foundation.
One of many items on the legislative “watch list” is the standard tax deduction. Without additional legislation, in 2026, the standard deduction for individual taxpayers younger than age 65 is scheduled to drop from $14,600 to $8,300.
While this may spell higher taxes for some taxpayers, the news could be positive for charitable giving. You’ll recall that the Tax Cuts and Jobs Act of 2017 increased the standard deduction significantly. As a result, only 9% of taxpayers itemized deductions in 2020 compared with 31% in 2017. Although certainly not the only factor motivating charitable giving, tax incentives do play a role in donors’ decision-making about whether, when, and how much to give. Indeed, statistics recently released by the National Bureau of Economic Research indicated that the increased standard deduction resulted in $20 billion fewer charitable donations in 2018 alone.
Stark Community Foundation is happy to work with you to develop a charitable giving plan for the next few years that will help you navigate anticipated changes in the law. For example, a tax-saving strategy commonly employed by SCF is a technique called "bunching," which allows you to make two years' worth of gifts upfront to your charitable fund to take advantage of the standard deduction while it is still high.
If you determine that bunching is right for you, naturally, cash is easy to give in a year of higher-than-expected income. So, if you earn a hefty bonus this year, get a significant increase in compensation, take a job buyout or experience a substantial liquidity event, your surplus income could make bunching ideal.
Most of the time, though, even when you deploy a bunching strategy, donating highly appreciated marketable securities is a better choice than giving cash because it is extremely tax efficient. Stock given to a public charity, such as your Donor Advised Fund or other type of fund at Stark Community Foundation, typically is deductible at the asset’s fair market value. SCF, in turn, pays no capital gains tax on its sale of the asset, thereby generating more dollars to support your philanthropic interests than if you had sold the stock and given the proceeds to your fund.
The bottom line? Now is a perfect time to look ahead at your charitable giving plans so that you don’t leave dollars behind. Your finances, as well as the charities you support, will benefit.
*This blog post is provided for informational purposes only, and is not intended as legal, accounting or financial planning advice.