Trends in charitable giving: Tax advantages of stock and cash donations

As the year winds down, high-net-worth individuals are turning their attention to charitable giving. This season, it’s important to factor in the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, that ushers in sweeping changes to the U.S. tax code, directly impacting how donors give, what they can deduct, and how they plan for the future.

Publicly Held Stock Gifts: A Window of Opportunity

Gifting publicly traded stock remains one of the most tax-efficient ways to support charitable causes. Under the OBBBA, 2025 offers a unique opportunity: there is no cap on deductions for stock gifts made this year to public charities. This provision opens the door for high-net-worth donors to make substantial contributions without being constrained by adjusted gross income (AGI) limitations.

The tax advantages of donating appreciated publicly traded securities are compelling. Donors can deduct the full fair market value of the stock at the time of the gift, while also avoiding capital gains tax, which is a significant benefit when dealing with highly appreciated assets. Additionally, the OBBBA maintains a lower AGI limitation for stock gifts and provides a five-year carryforward for any unused deductions, offering flexibility for long-term planning.

However, starting in 2026, top-tier taxpayers will see a 2% reduction in deduction value due to changes in marginal tax rates. Plus, a new 0.5% AGI floor will apply to itemized charitable deductions, meaning only contributions that exceed 0.5% of AGI will be deductible. These changes may prompt donors to accelerate their giving strategies in 2025 to take full advantage of the current rules.

Privately Held Stock: Complexity with Reward

While more complex than donating publicly traded securities, gifting privately held stock offers significant tax advantages for donors with concentrated ownership in private businesses or equity. The potential benefits make it well worth exploring, especially for those with a long-term charitable vision.

These gifts require thoughtful planning and execution. Key considerations include:

• Accurate valuation of the stock, which must meet IRS standards and often involves third-party appraisals.
• Transfer mechanics, which can vary depending on the structure of the business and shareholder agreements.
• Compliance with IRS regulations, including proper documentation and timing to secure the intended tax benefits.

Given these intricacies, working with experienced advisors makes a meaningful difference by hedging against potential deduction disallowance. Strategic guidance helps donors through the technical aspects and structure the gift to reflect both their philanthropic goals and financial plans.

Cash Gifts: Simplicity with Scale

Cash remains a straightforward and flexible giving vehicle. Under the OBBBA, the 60% AGI limitation for cash contributions to public charities is now permanent, preserving a benefit originally introduced under the 2017 Tax Cuts and Jobs Act. This allows donors to make larger one-time contributions, which is especially valuable for those looking to create immediate impact.

For individuals looking for a straightforward and effective way to support charitable causes, cash gifts remain a reliable option.

Planning for 2026 and Beyond

Starting in 2026, the OBBBA introduces several new constraints that will influence giving strategies:

• Itemized deduction cap: High-income donors will see their deduction value capped at 35%, even if they fall in the 37% tax bracket.
• Corporate giving floor: Corporations must exceed 1% of taxable income in charitable contributions to qualify for deductions.
• Non-itemizer deduction: Starting in 2026, non-itemizers can deduct up to $1,000 (single) or $2,000 (joint) for cash donations to public charities.
• AGI floor: Only charitable contributions exceeding 0.5% of AGI will be deductible, and top-tier taxpayers will see a 2% deduction cut.

These changes may encourage larger, less frequent gifts and accelerated giving in 2025 to maximize current benefits.

We Can Help

At Elliott Davis, we help donors identify the most effective giving vehicles and strategies to align their philanthropic vision with optimal tax outcomes.

Whether you're considering gifts of cash, stock, or private investments, our advisors offer:

• Personalized guidance on OBBBA implications.
• Strategic planning around AGI limits, asset valuation, and multi-year giving.
• Integration of charitable giving with estate and financial planning.

Don’t wait to start planning your 2025 charitable gifts. Contact Elliott Davis today and make the most of this year’s giving opportunities.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.