Six Tips

With only a few months left in 2025, it is important to evaluate your philanthropy sooner rather than later. Recently passed tax laws may throw a curveball into some financial planning strategies you have set in motion with your advisors.

Here are six tips to help you and your attorney, CPA, and financial advisor evaluate whether adjustments to your charitable plan might be in order. The team at the East Tennessee Foundation would be honored to join your meeting for the charitable giving conversation or to provide you with additional resources to help inform your discussions.

Be aware of the new estate tax exemption, which benefits taxpayers.

The One Big Beautiful Bill Act (OBBBA) extended or “made permanent” many favorable tax provisions, notably the elevated estate tax exemption. In technical terms, under the new law, the 2025 estate tax exemption is $13.99 million for single filers and $27.98 million for those married and filing jointly. In 2026, these numbers increase to $15 million and $30 million respectively. You may recall that the higher exemption was originally scheduled to sunset at the end of this year, which would have caused a lot more estates to be subject to tax. This, in turn, prompted many people to lean on charitable gifts in their wills and trusts to blunt the impact of estate taxes.

Keep planning!

If you are a high net worth individual, even though the estate tax exemption is staying high, this is no time to become complacent. Although no one knows what future tax legislation might look like, we all know that there will be tax legislation in the future. Today’s tax advantages will not be tomorrow’s tax advantages. Continue to talk with the East Tennessee Foundation and your advisors about your charitable giving plans so you are ready to make adjustments when the laws change again.

Consider not making a change.

Above all, remember that financial motivations are not the top reason people support charities. That is certainly our experience at the East Tennessee Foundation. So, if you were among the people who adjusted estate plans in anticipation of the lower estate tax exemption, consider retaining the larger bequest to your fund at the East Tennessee Foundation or other charities. While your tax benefits may not be as anticipated, your impact is still needed in our region.

2025 is important if you itemize deductions on your income tax return.

If you itemize deductions on your income tax return, 2025 presents a window of opportunity because the OBBBA increases the standard deduction in 2025. Additionally, your itemized charitable deductions will be subject to a “floor” and cap starting in 2026. A technique called “bunching” could allow you to make big contributions to your donor advised fund at the East Tennessee Foundation in 2025 so that you can benefit from itemizing your deductions. In turn, over the coming years, you can use your donor advised fund to support your favorite charities.

Stick to the basics.

While a lot is changing, many things are staying the same. Appreciated stock is still likely to be a much more tax-savvy gift to charity than cash, and it is important to keep this top of mind. In addition, IRAs remain a powerful charitable planning tool. For instance, when you name a fund at the East Tennessee Foundation as the beneficiary of an IRA, the gift avoids estate tax and income tax, both of which can hit your heirs hard.

Know the opportunities if you are 70 ½ or older.

If you are 70 ½ or older, the Qualified Charitable Distribution (QCD) is a great way to transfer up to $108,000 (2025’s per taxpayer limit) income tax free to a qualified charity, including some types of funds at the East Tennessee Foundation.

If you have questions, or if you would like additional information, please reach out to the team at the East Tennessee Foundation. We are happy to assist you in any way we can.

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.