The final weeks of the year are prime time for charitable giving, and for good reason—December 31 is the deadline for charitable contributions to be deductible on the current year's tax return. For business owners in the unique planning environment of 2025, year-end charitable giving strategies can serve multiple purposes: reducing taxable income, managing the impact of the potential TCJA sunset, supporting meaningful causes, and creating lasting philanthropic structures.

The Bunching Strategy with Donor Advised Funds

The elevated standard deduction under the TCJA means that many taxpayers do not itemize—and therefore receive no tax benefit from their charitable contributions. The bunching strategy addresses this by concentrating multiple years of charitable giving into a single year, pushing the taxpayer's itemized deductions above the standard deduction threshold. A donor advised fund is the ideal vehicle for bunching because the donor receives an immediate deduction for the full contribution while retaining the ability to recommend grants to specific charities over future years.^[1]

Contributing Appreciated Securities

Donating long-term appreciated securities remains one of the most tax-efficient giving strategies. The donor deducts the full fair market value of the securities (subject to the 30% of AGI limit for contributions of capital gain property to public charities) and avoids capital gains tax on the appreciation. For business owners holding concentrated stock positions, a year-end charitable contribution of appreciated shares can simultaneously reduce the portfolio concentration risk and generate a valuable tax deduction.^[2]

Qualified Charitable Distributions

For business owners over age 70½ with individual retirement accounts, the qualified charitable distribution (QCD) remains the most tax-efficient giving vehicle. A QCD of up to $105,000 per year (adjusted for inflation) directly from the IRA to a qualified charity satisfies the required minimum distribution obligation and is excluded from gross income entirely. The exclusion is more valuable than a charitable deduction because it reduces AGI—which affects other tax calculations including the Medicare surtax, the net investment income tax, and the phase-out of various deductions and credits.^[3]

Substantiation Requirements

No charitable deduction is allowed without proper substantiation, and the requirements increase with the size of the contribution. For cash contributions of $250 or more, the donor must have a contemporaneous written acknowledgment from the charity before the earlier of the date the return is filed or the due date (including extensions). For non-cash contributions exceeding $500, Form 8283 must be filed. For non-cash contributions exceeding $5,000 (other than publicly traded securities), a qualified appraisal is required.^[4]

The IRS strictly enforces substantiation requirements, and deductions have been denied in numerous cases where the taxpayer made a legitimate contribution but failed to obtain proper documentation. Year-end giving should include a review of all contributions made during the year to ensure that substantiation requirements have been met for each contribution.

Year-End Timing Issues

For a contribution to be deductible in the current year, it must be completed before December 31. A check mailed on December 31 is generally treated as made on the date of mailing (even if not cashed until January). Credit card contributions are deductible in the year the charge is made, regardless of when the bill is paid. Contributions of stock are complete when the stock is transferred to the charity's account. Business owners should plan ahead to ensure that transfers of appreciated property and contributions to donor advised funds are processed before year-end deadlines with their tax advisors.^[5]