While Giving Season hasn't officially arrived yet, it's a sure bet that financial advisors across the country are touching base with philanthropic clients to start talking about strategies for charitable giving. And in many cases, those discussions will touch on the sweeping One Big Beautiful Bill Act, which according to one tax planning leader represents a unique opportunity.
"There's a significant opportunity before the end of the year to take advantage and unlock some of these additional tax savings by accelerating charitable gifts," says Bob Dietz, national director of tax research at Bernstein Private Wealth. "But it's not across the board. You have to understand which clients and which taxpayers are going to be able to benefit from this."
The Tax Cuts and Jobs Act introduced during President Donald Trump's first term capped the SALT deduction capped at $10,000, regardless of marital status, limiting clients' ability to minimize their federal tax liability.
As more clients are now able to itemize deductions as a result of OBBBA, which temporarily expands the SALT cap to $40,000, Dietz says the firm is proactively reaching out to clients to discuss possible tax savings strategies. For those who are charitably inclined, he says conversations have involved potentially accelerating future gifts they intend to make into 2025.
"This may be the first year for some of them to itemize deductions in quite a while as a result of the Tax Cuts and Jobs Act," Dietz says. "Now that they potentially have this additional $30,000 SALT deduction cap on the table, there's a real possibility we'll see a lot more clients itemizing, and as a result, they can finally take advantage full advantage of larger charitable gifts. And so we're looking at accelerating those into donor-advised funds."
For Monish Verma, founding partner and CEO at Vardhan Wealth Management, conversations with clients around gifting go beyond just taking advantage of the temporary SALT expansion.
"Today, people have more wealth than ever before. Due to strong market performance this year, we have significant gains with no losses," Verma says. "Philanthropy efforts help us offset those gains. We’re having more conversations with our clients’ trusted advisors, like CPAs, to strategize."
The new tax law also introduces a couple of new limitations on charitable giving, according to Dietz. Starting next year, individuals will be faced with a 0.5% AGI floor on charitable deductions for individuals. Besides that, individuals at the top marginal tax bracket will see the overall limit for their itemized deductions get pushed down from 37% to 35%.
"By accelerating those gifts into 2025, you're getting ahead of those new limitations," he says.
Dietz says the impact of accelerating charitable contributions will likely be most felt by clients in high income-tax states – including California, New York, and Minnesota – where taxpayers are very likely to be pushing up against or being over the SALT deduction cap. Beyond that, he says residents of Texas, Florida, and other states with high property taxes and other local tax liabilities may see an advantage.
At Vardhan Wealth Management, Verma says other factors may also influence decisions around timing for the firm's clients, who are among the top 1% of earners in the country.
"Did they sell a property or a business, and are they looking to offset some of that wealth?" he says. "Our job is to advise them on how to do it best and whether it makes sense to give it in one lump sum or split it up to maximize the tax benefits."
While the OBBBA temporarily boosts the SALT cap, it also includes a phase-down provision, which reduces the deduction limit by 30% of the amount by which a taxpayer's modified adjusted gross income exceeds $500,000. According to Dietz, that further narrows the field of potential winners from sped-up charitable contributions.
"Because of the phaseout of the temporary enhanced SALT cap, it's not our high-income clients [who'll stand to benefit most]. It's going to be more of our middle-high-income clients, who have incomes up to about $500,000," Dietz says. "Once you hit that $500,000 mark in modified adjusted gross income, that $40,000 salt deduction cap starts to phase back to $10,000."
From where he stands, the rush to itemize charitable gifts for maximum tax impact would most benefit nonprofits that run annual fundraising campaigns during Giving Season. As the end of 2025 approaches and more taxpayers get wind of the opportunity from pulling charitable gifts forward, he sees a better-than-even chance of more charitable dollars going to those organizations.
With federal tax auditors now leaning more on AI, Dietz encourages philanthropic clients to keep their records straight and clean.
"Making sure that you are very carefully documenting your gifts, that you're complying with all of the IRS requirements for qualified deductions and donations, is going to be really important," he says. "I think going forward, in an environment where you have AI that's part of the review process, it's going to be much easier for [the IRS] to catch documents that might be missing."
According to Dietz, drastic changes like OBBBA represent a huge opportunity for financial advisors and planners to proactively strengthen their client relationships.
"These clients are looking for answers. They want to make sure that they're not missing anything. So I think it can be a really important way for advisors to add value to the relationship that goes beyond just money management," he says.
For Verma, proactive discussions with prospects is also strategically important to attract new relationships. As roaring markets push more aging clients further up the wealth spectrum, he says more people are becoming interested in charitable giving and potentially feeling underserved by their current advisor.
"[For married clients,] it’s important to have both spouses in the room when you have that discussion to ensure they are aligned," he says. "Having these discussions and bringing in a tax specialist are the best ways to retain bigger relationships and grow your book of business."
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