Charitable Bunching
A strategy of concentrating multiple years of charitable contributions into a single tax year to exceed the standard deduction threshold and itemize, then taking the standard deduction in alternating years.
Detailed Explanation
Since the TCJA roughly doubled the standard deduction, most charitable giving no longer produces a tax benefit because itemized deductions fall short of the standard. Bunching solves this: instead of giving $10,000 every year (no itemizing benefit), give $30,000 every third year and itemize that year. Donor-advised funds (DAFs) make bunching practical because the lump-sum contribution is deductible immediately even though grants flow to charities over many years.
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Learn about Tax Planning & StrategyRelated Terms
Donor-Advised Fund (DAF)
A charitable giving vehicle held by a public charity sponsor that lets a donor make a tax-deductible contribution today and recommend grants to qualifying charities over time.
Itemized Deductions
Specific deductions claimed on Schedule A in lieu of the standard deduction, including state and local tax, mortgage interest, charitable contributions, and medical expenses.
Standard Deduction
A fixed dollar amount that reduces taxable income, available to taxpayers who do not itemize deductions on Schedule A.
SALT Deduction (State and Local Tax)
The federal itemized deduction for state and local income, sales, and property taxes, capped at $10,000 ($5,000 for married filing separately) under TCJA, with the cap raised under OBBBA.
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