Tax Tips: Six Smart Ways to Save on Taxes with Charitable Gifts to MNHS
Tax Tips: Six Smart Ways to Save on Taxes with Charitable Gifts to MNHS
Most people know that giving to charities like MNHS can provide tax benefits. The most common and well-known tax benefit is an income tax charitable deduction for a cash gift. But fewer people know there are several different ways that supporting MNHS can help you save on taxes. Check out these six other tax-savvy giving options.
1. Capital Gains Tax Savings with Gifts of Noncash Assets
In addition to a full fair market value income tax deduction, giving long-term capital gain property (like stocks, mutual fund shares, or parcels of real estate that have gone up in value and have been held for more than one year) allows donors to bypass capital gains taxes as well.
For example, if you paid $200 for shares of stock several years ago, and those shares are now worth $1,000, upon selling the shares you would owe capital gains taxes (typically 15-23.8%, and possibly more with state income taxes) on the $800 increase in value—the realized “capital gain.” Even assuming the lower rate of 15% and no state income tax, the capital gains tax would be $120 ($800 x 0.15), and the net amount after the sale would be $880 ($1,000 – 120 = $880). If you were planning to give $1,000 cash to MNHS anyway, you’d come out ahead by $120 if you gave the stock instead, because MNHS, as a tax-exempt organization, wouldn’t have to pay the tax on the capital gain upon its sale of the stock, and would get to use the full $1,000. Plus, you’d still have left in your pocket the full $1,000 of cash that you otherwise would have used for the charitable gift. In addition, as with a cash gift, you’d still be eligible to deduct the full fair market value of the shares ($1,000), which further reduces taxable income if you itemize deductions.
Making charitable gifts with appreciated assets provides a double tax benefit: a regular charitable income tax deduction plus bypass of capital gains tax.
2. “Bunching” Charitable Gifts
Ever since the Tax Cuts and Jobs Act of 2017 doubled the standard deduction for taxpayers, “bunching” of charitable gifts has been a popular tax-savings technique. When the higher deduction levels were made permanent in 2025, it meant that bunching will continue to be a smart move for many taxpayers for the foreseeable future.
What is “bunching”? “Bunching” simply means combining and giving several years’ worth of charitable gifts in a single tax year. It can be a great option for people who give to charity each year but normally don’t have enough total itemized deductions to meet the standard deduction level ($16,100 for single taxpayers, and $32,200 for married filing jointly in 2026). For those folks, they save more taxes simply by taking the standard deduction, and so don’t get much or any tax benefit from their charitable giving (but see the next Tax Tip). However, if they bunch enough years’ worth of gifts into a single year to have more itemized deductions than the standard deduction amount, they can save more on taxes by (a) itemizing in the bunching year, and (b) taking standard deductions in the non-bunching years.
Example: Mary gives $10,000 per year to MNHS but only has $5,000 of other itemizable deductions. Her total deduction is $15,000, which is lower than the $16,100 standard deduction, so she takes the standard deduction and therefore doesn’t get much tax benefit from her charitable giving. Upon the advice of her accountant, rather than $10,000 per year for the next four years, she decides to bunch gifts and give $40,000 to MNHS this year. Combined with her other $5,000 of itemizable deductions, she has a total of $45,000 of deductions this year, and so itemizes on her next income tax return, reducing her taxable income by $45,000 instead of the standard deduction of $16,100. Then, in each of the next three years, she plans to take the standard deduction of $16,100 (adjusted for inflation), which will be much higher than her remaining $5,000 of noncharitable itemized deductions. In four years, she will again bunch her charitable gifts to MNHS.
3. New Non-Itemizer Charitable Deduction
One new provision of the 2025 tax legislation, as part of what is often called the One Big Beautiful Bill Act, is a special limited charitable income tax deduction available to nonitemizers (people who take the standard deduction).
People who take the standard deduction now may additionally deduct cash gifts to qualified charities like MNHS, up to $1,000 per year for single filers, and up to $2,000 per year for married couples filing jointly. Gifts to donor-advised funds (DAFs) and gifts of non-cash property do not qualify for this special deduction.
If you bunch your charitable contributions (see previous Tax Tip), making additional cash gifts of $1,000 (single filer) or $2,000 (married filing jointly) in the standard deduction years can make that technique even more attractive.
4. IRA Qualified Charitable Distributions
Qualified Charitable Distributions from IRAs (“QCDs”) have been a tax-smart way to give ever since they were introduced in 2006. QCDs have grown dramatically in popularity and use in recent years as more people learn about them and retirement account balances have grown larger.
A QCD allows those age 70-1/2 or older to give up to $111,000 per year (as of 2026) directly from an IRA to qualified charitable organizations like MNHS without paying federal income tax on the distribution. Some things to know about QCDs to MNHS:
- The gift must be from an IRA (not from a 401(k), 403(b), or other qualified plan account)
- The distribution must be made directly from the IRA administrator to MNHS
- Donors must be at least age 70-1/2 at the time of the distribution
- The maximum amount is $111,000 per person ($222,000 per married couple) in 2026, adjusted for inflation each year
- For donors age 73 or over, QCDs can count toward and satisfy annual required minimum distributions (RMDs) if made before other retirement account withdrawals each year
- With a limited exception for certain life-income gifts (for example, a Charitable Gift Annuity of no more than $55,000 in a single tax year), generally no quid pro quo is allowed for QCDs—nothing of value can be received in exchange for the contribution
- A QCD cannot be made to a Donor Advised Fund, a private foundation, or a supporting organization, but must be made to a qualified public charity (like MNHS).
If you qualify, QCDs can be a great way to support MNHS and lower taxes whether you itemize or not!
5. Naming Charity as the Beneficiary of Retirement Accounts
When children or other individual beneficiaries withdraw money from inherited non-Roth retirement accounts (IRA, 401(k), 403(b), etc.), all of that money will be taxed upon distribution. In most cases, inherited retirement accounts must be fully withdrawn within a 10-year period at the latest, and most are withdrawn more quickly. This usually means large tax bills, and it’s not unusual for more than a third of retirement accounts to be lost to taxes—frequently, it’s even more. If a charity is named as beneficiary on the retirement accounts, though, the charity gets to keep the entire amount because it’s tax-exempt.
Thus, it’s generally most smart and tax-wise to leave gifts to your favorite charities like MNHS through beneficiary designations on your qualified retirement accounts, and leave the non-taxable property (through wills, revocable trusts, life insurance policies, etc.) to family members or other loved ones.
6. Life-Income Gifts: Gifts That Pay YOU
Did you know you can make a gift to a charity that gives you a tax deduction and pays you income for life? With a Charitable Gift Annuity (CGA), you make a contribution and in exchange, receive a safe, fixed annual income for the duration of your life (or lives, if for two people). You also get an immediate income tax deduction, and typically, a portion of the annual payment to you is tax-free for several years as well. If you contribute appreciated stock, there are capital gains tax savings, too. After your lifetime, whatever is left goes to benefit the MNHS programs you care about most.
A Charitable Remainder Trust (CRT) can similarly be used to provide increased income for one or more people for life, a term of years up to 20 years, or some combination, and at the end of the term, the remainder of the trust goes to MNHS.
There are even more ways to save taxes through charitable giving. These are just a few of the more popular options.
We are grateful for your support of the Minnesota Historical Society and for your value in preserving Minnesota’s history. Thank you!
Want More Information?
If you have questions about how you might make a positive difference and save taxes by supporting MNHS and its programs, please contact Jennifer Pogatchnik, VP for Advancement, at jennifer.pogatchnik@mnhs.org or 651.491.5684, or visit our main Planned Giving page to learn more.
(Note: MNHS does not give legal, financial, or tax advice, and urges supporters to seek advice from their own professional advisors about how a particular idea may affect their specific circumstances.)