One Big Beautiful Bill: 4 Charitable Giving Changes Every Retiree Must Know! | The Limitless Retirement Podcast

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This conversation discusses significant changes in charitable giving rules for retirees, particularly focusing on new tax deductions and strategies for maximizing retirement income. Danny Gudorf explains the implications of the new above-the-line deduction for cash donations, the importance of timing in charitable contributions, and the benefits of qualified charitable distributions from IRAs. The discussion emphasizes the need for strategic planning to optimize tax benefits and protect retirement income.

The New Rules Reshaping Charitable Giving in Retirement

Why These Tax Changes Could Save You Thousands—or Cost You Big

If you’re in or near retirement, a sweeping new law just redefined how charitable giving works with your taxes. For retirees over 50, the implications are massive: these changes could help you save thousands in taxes—or shrink the value of your donations if you don’t act quickly.

The clock is ticking. Beginning in 2026, a set of tax shifts will create both new opportunities and new pitfalls for retirees who give to charity. Understanding the rules now could mean the difference between wasted deductions and a stronger retirement plan.

Let’s look at the three biggest changes and why the next few years may be the most critical charitable planning window of your lifetime.

Key Takeaways

  • The new bill changes charitable giving for retirees significantly.
  • Starting in 2026, there will be a new above-the-line deduction.
  • Married couples can deduct up to $2,000 in cash donations.
  • This deduction applies only to cash donations to public charities.
  • Higher income retirees face a deduction floor starting in 2026.
  • Timing is crucial for charitable giving before 2026.
  • Qualified charitable distributions remain a powerful tool.
  • Retirees should consider front-loading contributions in 2025.
  • Understanding tax law changes is essential for retirement planning.
  • The next four years are critical for optimizing retirement strategies.

A Brand-New Deduction for Retirees Who Don’t Itemize

For years, most retirees have lost out on tax breaks for charitable giving. If you took the standard deduction, your donations often provided no tax benefit. That’s about to change.

Starting in 2026, retirees will enjoy a new above-the-line deduction for cash donations to public charities—even if they don’t itemize.

  • Married filing jointly: Deduct up to $2,000

  • Single filers: Deduct up to $1,000

This deduction is on top of the standard deduction, giving retirees a meaningful tax break for gifts they were already making.

Think about it: A retired couple donating $2,000 annually to their church previously received no deduction. After 2026, that same gift lowers taxable income by $2,000—extra savings without any extra giving.

Here’s where it gets strategic. This creates what some planners call a hidden Roth conversion opportunity. If you plan to convert $30,000 from a traditional IRA to a Roth, that new $2,000 deduction allows you to convert $32,000 while paying the same taxes. In other words, more tax-free money for your future.

A New Floor on Charitable Deductions for Higher-Income Retirees

Alongside the new deduction, Congress added a 0.5% AGI floor for itemized charitable deductions starting in 2026.

That means you must reduce your charitable deduction by half a percent of your adjusted gross income (AGI).

  • If your AGI is $200,000 and you donate $10,000, your deduction shrinks to $9,000.

  • The higher your AGI, the bigger the haircut.

This hits affluent retirees hardest—particularly those who give large sums or use donor-advised funds.

If you’re planning major charitable contributions, you’ll want to complete them before January 1, 2026. After that, every dollar faces the new deduction floor.

One smart strategy is to “bunch” donations in 2025 using a donor-advised fund (DAF). By front-loading several years of giving into one large contribution, you lock in today’s full deduction. Then, you can distribute the funds gradually to charities in the future.

But don’t wait until December—DAF providers are likely to be overwhelmed with last-minute requests.

Qualified Charitable Distributions (QCDs) Remain Untouched

For retirees aged 70½ or older, there’s good news: Qualified charitable distributions (QCDs) from IRAs remain one of the most powerful tools in retirement tax planning.

Here’s why QCDs stand out:

  • They reduce taxable income dollar-for-dollar.

  • They count toward your required minimum distribution (RMD).

  • They avoid the new 0.5% AGI haircut entirely.

Example: At age 72, suppose your RMD is $15,000. Instead of withdrawing the full amount and paying taxes before donating to your church, you could direct $5,000 as a QCD. That leaves you with only $10,000 taxable income and fulfills your charitable giving—tax-free.

For retirees who are both tax-conscious and charitably inclined, QCDs remain unmatched.

Why 2025 May Be the Most Important Year

The next four years create a rare planning window:

  • The new deduction begins in 2026.

  • The AGI floor also starts in 2026.

  • QCDs remain strong, but planning is essential.

This makes 2025 the critical year to act if you want to maximize deductions before the new floor cuts into them. High-income households especially should consider whether to front-load giving through donor-advised funds.

What This Means for Your Retirement Plan

The one big beautiful bill reshaped charitable giving for retirees. To recap:

  • A new deduction for non-itemizers is a win for most retirees giving to public charities.

  • A new AGI floor for high earners reduces the value of large gifts starting in 2026.

  • QCDs remain untouched, offering retirees over 70½ a tax-smart way to give.

Your charitable giving strategy may need a complete refresh. What worked last year may not work next year. And what you do in 2025 could impact your taxes for years to come.

Conclusion: Don’t Let This Planning Window Pass You By

These changes aren’t permanent. But for now, they create both opportunities and risks that retirees can’t afford to ignore.

The decisions you make about charitable giving in the next few years will directly affect your income, your tax bill, and your legacy.

? Now is the time to revisit your retirement tax strategy. A proactive plan could save you thousands while ensuring your generosity makes the biggest possible impact.

*This blog post is based on the insights shared by Gudorf Financial Group. For personalized advice tailored to your unique circumstances, always consult a financial, legal, or tax professional.*

Transcript: Prefer to Read — Click to Open


Danny (00:00.088)

The one big beautiful bill just changed everything about charitable giving in retirement. And if you’re over 50, these changes could save you thousands in taxes or cost you big time if you don’t act fast. I’m Danny Gudorf from Gudorf Financial Group. And today we’re breaking down exactly what these new rules mean for your retirement plan and your wallet.

Let’s start with the biggest change that affects most retirees. Beginning in 2026, there will be a new above the line deduction for people who don’t itemize their taxes. If you’re married and file jointly, you can deduct up to $2,000 in cash donations. And if you’re single, up to $1,000, even if you take the standard deduction. This is huge.

because most retirees haven’t been able to deduct their charitable giving in recent years unless they had very large expenses to itemize. The key caveat, this applies only to cash donations to public charities. Donor-advised funds, private foundations, and non-cash gifts do not qualify. Think about it this way. Many retired couples give $2,000 or more

to their church each year. Before this bill, that money provided no tax benefit. Starting in 2026, that same $2,000 donation will create a real deduction on top of the larger standard deduction and other senior benefits. That means more of your retirement income stays in your pocket instead of going to the IRS. And strategically,

this deduction can create what I call a hidden Roth conversion opportunity. If you plan to convert $30,000 from your traditional IRA to a Roth, that extra $2,000 deduction means you could convert $32,000 and pay the same tax bill. That’s free money working for your future. But there’s also a catch for higher income retirees.

Danny (02:25.645)

Starting in 2026, the new law imposes a floor on charitable deductions when you itemize. Specifically, you must reduce your deduction by half a percent of your adjusted gross income. So if your income is $200,000 and you donate $10,000, you can only deduct $9,000 because $1,000

is lost to the floor. The higher your income, the bigger this haircut becomes. This mainly impacts affluent households and can affect retirees who make large contributions, especially into donor advised funds. And that’s why timing is everything. If you’re planning any major charitable giving, you’ll want to get it done before January 1st, 2026. After that,

the new floor kicks in and trims your deduction. This creates a major opportunity for strategic giving in 2025. If you normally spread your gifts over several years, consider bunching them into 2025 using a donor advised fund. That way you can lock in the full deduction before the haircut starts, then distribute the money to charities gradually in future years.

Just don’t wait until the last minute because donor-advised fund providers are likely to be swamped with requests in December. Now here’s the silver lining for retirees age 70 and a half or older. Qualified charitable distributions from IRAs are completely untouched by these changes. In fact, they become even more valuable because they’re not subject to the new floor haircut

or reduction, every dollar you send directly from your IRA to a qualified charity reduces your taxable income dollar for dollar, counts toward your required minimum distribution, and lowers future distributions you’ll be forced to take. For example, say you’re 72 and your required minimum distribution is $15,000 this year. Instead of taking the full distribution,

Danny (04:51.917)

paying taxes, and then writing a check to your church, you could send $5,000 directly from your IRA as a qualified charitable distribution. That leaves you with only $10,000 taxable income from the IRA while still fulfilling your charitable commitment without paying a dime in tax on the $5,000. The key is knowing how these changes

fit into your overall retirement tax strategy. The new $2,000 deduction for non-itemizers helps most retirees. The new 0.5 % AGI floor limits high-income donors. And qualified charitable distributions remain one of the most powerful tools for charitably inclined retirees. If you have significant assets and a desire to give,

2025 is the year to front load your contributions. Using a donor advice fund lets you capture the full deduction before the floor hits, then spread out the giving over time. But you must act before the end of 2025 to take advantage. All of this shows how retirement tax planning is constantly evolving. What worked last year may not work next year, and the next four years

could be your best window for optimizing your retirement strategy. The rules aren’t permanent, so understanding how to adapt is critical to protecting your income and your legacy. Now that you see how the one big beautiful bill impacts charitable giving, you’ll also want to learn about the other major tax changes it created.

These new rules open up a critical four-year planning window that retirees can’t afford to waste. Click right here to find out why.

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