Year-End Giving: Why Donating Appreciated Securities May Be Your Smartest Move in 2025

As the holiday season and year-end approach, many clients are considering how best to support their favorite charities. While cash gifts are always welcome, donating appreciated securities —such as stocks, mutual funds, or ETFs —can offer significant tax advantages, especially in light of upcoming tax law changes.

Why Consider Donating Appreciated Securities?

There are three major benefits to donating appreciated securities to charities and organizations in place of cash gifts.

1. Double Tax Benefit:

When you donate appreciated securities held for more than one year to a qualified charity, you generally receive a charitable deduction for the fair market value of the asset. At the same time, you avoid paying capital gains tax on the appreciation. For example, if you bought stock for $2,000 and it’s now worth $10,000, donating the stock lets you deduct the full $10,000 and avoid capital gains tax on the $8,000 gain.

2. Greater Giving Power:

Because you avoid capital gains tax, you can give more to charity compared to the after-tax cost of selling the assets and donating the cash proceeds. If the security is one you want to hold in your portfolio, you can use the cash you would have otherwise donated to buy the security back at a higher cost basis. This strategy will also save future capital gains tax on that holding.

3. No Age Restriction:

Unlike Qualified Charitable Distributions (QCDs) from IRAs, which are only available to those age 70½ and older, anyone can donate appreciated securities. This makes it an excellent strategy for younger donors who want to maximize their tax benefits.

Using a Donor Advised Fund (DAF)

If you’re unsure which charities you want to support right now, or if you want to make a large gift but distribute it over several years, a Donor Advised Fund (DAF) can be a flexible solution. Here’s how it works:

• Immediate Tax Deduction: You receive a charitable deduction in the year you contribute to the DAF.
• Simplicity: You can contribute appreciated securities directly to the DAF, avoiding capital gains tax and simplifying recordkeeping. As long as the funds have been held for more than a year, your deduction is the security’s fair market value.
• Flexibility: You can take your time deciding which charities to support, and you can make grants to multiple organizations over time.
• Investment Growth: Assets in the DAF can be invested and grow tax-free, increasing your charitable impact.

Major Charitable Giving Changes Under the OBBBA for 2026 and Beyond

The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, brings several important changes to charitable giving and deductions, most of which take effect for tax years beginning after December 31, 2025.

New “Floor” for Charitable Deductions:

Starting in 2026, individuals who itemize can only deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI). For example, if your AGI is $200,000, the first $1,000 of charitable contributions will not be deductible.

Return of the Overall Itemized Deduction Limitation:

A new limitation reduces itemized deductions (including charitable gifts) by 2/37 of the lesser of total itemized deductions or the amount by which income exceeds the 37% tax bracket threshold. This effectively caps the tax benefit of itemized deductions at 35% for high-income taxpayers.

Partner with Maner Costerisan for Elevated Gifting Strategies

Because of these upcoming changes, 2025 may be a great year for you to fulfill your charitable goals and get the biggest bang for your charitable dollar. Further, donating appreciated securities can be a highly effective way to support your favorite causes while maximizing your tax benefits, especially as new rules take effect in 2026.

If you’re considering a significant charitable gift this year, or want to explore the benefits of a Donor Advised Fund, contact our high net worth experts. We can help you develop a giving strategy that aligns with your philanthropic goals and optimizes your tax situation.