I'm a Financial Planner: Here's How to Make the Most of Your Charitable Giving on a Budget

With the holidays right around the corner, this is the time many of us give back to our favorite charities.

Despite many Americans struggling with finances in the midst of lingering inflation and high credit card debt, charitable giving increased 6.3% to $592.5 billion in 2024, according to Giving USA's 2025 Annual Report on Philanthropy.

You shouldn't donate to a charity simply for a tax write-off. Instead, find one that means something to you or your loved ones.

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Whether it's a local shelter for homeless people or animals or an organization that's important to you, like Feeding America Wisconsin is important to me, many organizations could use your help.

While there are many ways to give, some strategies can be more impactful than others. By understanding how to maximize your charitable donations, you can make the most of your gifts while staying on budget.

Take advantage of tax benefits

You can save more on taxes if you have the right strategy for donations, which also gives you the ability to donate more. To encourage charitable giving, the IRS offers tax deductions for donations made throughout the year.

However, to claim these deductions, you need the right paperwork and have it filed correctly.

If you're seeking a tax deduction, make sure your donation falls under the IRS's definition of a charitable donation. You can donate to organizations that are registered as tax-exempt, including such places as churches and religious organizations or museums and educational groups.

But be careful — not all nonprofits are tax-exempt, so do your homework before you choose.

If you plan to make donations next year, a few changes that you need to be aware of are coming from the One Big Beautiful Bill (OBBB).

Beginning in 2026, universal deductions are changing for non-itemizers. If you're a single filer, you can deduct up to $1,000 in cash donations, and if you're married, that number goes up to $2,000.

Also starting next year, if you itemize your deductions, you're required to contribute at least 0.5% of your adjusted gross income before claiming any charitable deductions.

If you earn a higher income, the value of your charitable deduction is now capped at 35%, down from 36% in previous years. While this might seem like a slight change, this could significantly impact your donations moving forward.

Consider qualified charitable distributions

If you turned 73 this year, you have until April 2026 to begin taking your required minimum distribution (RMD). A way to meet your annual RMD is by using a qualified charitable distribution (QCD). This allows those age 70½ and older to make donations of up to $100,000 from their IRA.

When you make a distribution from your IRA, those are pre-tax dollars and can be used to meet your annual RMD. This will reduce your adjusted gross income and can go directly to charity without being taxed when you withdraw.

If you're worried you don't have enough extra funds to donate to charity this year, that's okay.

I recommend working with a financial professional. They can help you determine the best ways to maximize your donation while still staying within your budget.

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