Bunching Charitable Gifts: Deduction Timing and the Donor-Advised Fund

What does it mean to bunch charitable donations?

Bunching means making two or more years of charitable gifts in a single year, so that itemized deductions for that year exceed the standard deduction, and taking the standard deduction in the other years. For 2026 the standard deduction is $32,200 on a joint return and $16,100 for a single filer (Rev. Proc. 2025-32). Itemizing is an election made each year (IRC § 63(e)), and a gift is deducted in the year it is paid (IRC § 170(a)(1)).

The idea rests on one feature of the Code. A taxpayer subtracts either the standard deduction or the total of itemized deductions, not both (§ 63(b), (e)). Charitable gifts are an itemized deduction. A donor whose itemized deductions fall short of the standard deduction every year gets no itemized deduction for those gifts. The same gifts concentrated in one year can carry that year’s total over the line.

This page covers the timing rules. The donor-advised fund itself is covered on the donor-advised fund vs. private foundation page.

The standard deduction

The Code sets base amounts of $15,750 for a single filer and $23,625 for a head of household, with a joint return at twice the single amount, and directs that they be increased for inflation for taxable years beginning after 2025 (§ 63(c)(2), (c)(7)). Those base amounts were written into § 63(c)(7) by Public Law 119-21. The dollar figures for 2026 and 2027 are the inflation-adjusted amounts the IRS published:

Source: Rev. Proc. 2025-32, § 4.14 (taxable years beginning in 2026); Rev. Proc. 2026-35, § 3.15 (taxable years beginning in 2027).

A taxpayer who is 65 or older, or blind, adds an additional amount: $1,650 for 2026 and $1,700 for 2027, or $2,050 for 2026 and $2,100 for 2027 if unmarried and not a surviving spouse (same revenue procedures). A married person filing separately whose spouse itemizes has a standard deduction of zero (§ 63(c)(6)).

Rules for 2026 and later

Public Law 119-21 changed three rules for taxable years beginning after December 31, 2025. Each affects the bunching arithmetic.

• A 0.5% floor for itemizers. An individual’s charitable contributions are allowed only to the extent that their total exceeds 0.5 percent of the contribution base for the year (§ 170(b)(1)(I)). The contribution base is adjusted gross income, computed without any net operating loss carryback (§ 170(b)(1)(H)). The floor is applied in a set order that reaches cash gifts to public charities last.
• A deduction for non-itemizers. An individual who does not itemize may deduct up to $1,000, or $2,000 on a joint return, of contributions made in cash during the year (§ 170(p)). Those dollar amounts are fixed in the statute. The gifts must go to an organization described in § 170(b)(1)(A). Gifts to a supporting organization described in § 509(a)(3), and gifts to establish or maintain a donor-advised fund, do not count. The amount is figured without the 0.5% floor and without carryovers.
• A reduction for the top bracket. An individual’s itemized deductions are reduced by 2/37 of the lesser of two amounts: the itemized deductions, or the taxable income (computed before this reduction and with the itemized deductions added back) that exceeds the dollar amount at which the 37 percent bracket begins (IRC § 68(a)). The reduction is applied after every other limit (§ 68(b)).

The floor has its own carryover rule. An amount disallowed by the floor is added to a carryover only in a year from which the donor already has an excess to carry forward under one of the percentage limits (§ 170(d)(1)(C)). The heading of that provision describes floor amounts as “carried forward only from years in which limitation is exceeded.” On its terms, a donor who stays within the percentage limits does not carry the floor amount to a later year.

A worked example

The following is a hypothetical illustration of the mechanics, not a prediction and not advice. A married couple files jointly. In each of 2026 and 2027 their adjusted gross income is $200,000 and their itemized deductions other than charitable gifts are $20,000. They intend to give $20,000 in cash over the two years, directly to public charities that qualify under § 170(p). Neither is 65 or blind, and their income is below the 37 percent bracket.

Hypothetical illustration. The floor is 0.5% of $200,000, or $1,000. Even giving: $10,000 less $1,000 is $9,000; $9,000 plus $20,000 is $29,000, below the standard deduction in both years; $32,200 plus $2,000 is $34,200; $33,200 plus $2,000 is $35,200; $34,200 plus $35,200 is $69,400. Bunched: $20,000 less $1,000 is $19,000; $19,000 plus $20,000 is $39,000; $39,000 plus $33,200 is $72,200. The difference is $2,800 of deductions, not $2,800 of tax.

Three things drive the result. Even giving never reaches the standard deduction, so the itemized charitable deduction is unused in both years. The non-itemizer deduction recovers $2,000 of it each year. Bunching gives up that $2,000 in both years, because the couple itemizes in 2026 and makes no gifts in 2027, and gains the amount by which $39,000 exceeds the 2026 standard deduction.

Change the facts and the answer changes. With other itemized deductions of $5,000 instead of $20,000, the bunched year totals $24,000, still below $32,200, and bunching two years produces no itemized deduction at all.

Donor-advised fund timing

Bunching does not require a donor-advised fund. A donor can give two years of gifts directly to charities in one year. The fund is used when the donor wants the deduction in one year and the charities to receive the money over several.

A donor-advised fund is a fund or account that is separately identified by reference to a donor’s contributions, is owned and controlled by a sponsoring organization, and over which the donor has, or reasonably expects to have, advisory privileges on distributions or investments (IRC § 4966(d)(2)). The donor advises. The sponsoring organization owns and controls.

The deduction belongs to the year of the contribution to the sponsoring organization, because that is when payment is made (§ 170(a)(1)). Two conditions are specific to these funds (§ 170(f)(18)):

• The sponsoring organization must not be one of the excluded types: an organization described in § 170(c)(3), (4), or (5), or a Type III supporting organization that is not functionally integrated. IRS Publication 526 describes the first group as a war veterans’ organization, a fraternal society, or a nonprofit cemetery company.
• The donor must obtain a contemporaneous written acknowledgment from the sponsoring organization that it has exclusive legal control over the assets contributed.

Later grants from the fund to charities are distributions by the sponsoring organization of assets it already owns. Read together, these provisions mean the donor’s deduction arises once, on the way in, and the grant years carry no further deduction for the donor.

Two consequences follow from provisions already described. A contribution to a donor-advised fund does not count toward the non-itemizer deduction (§ 170(p)(2)), so it produces a deduction only for a donor who itemizes that year. And the records matter: the acknowledgment and the other proof the Code requires are covered on the substantiation page.

Contributing appreciated shares rather than cash follows further rules; see giving appreciated stock to charity.

Percentage limits and carryovers

A large gift in one year can run into the ceilings in § 170(b)(1). Each is a percentage of the contribution base, which is adjusted gross income. A sponsoring organization of a donor-advised fund is by definition not a private foundation (§ 4966(d)(1)), so contributions to one generally fall under the limits for public charities.

Source: IRC § 170(b)(1). “Public charity” here means an organization listed in § 170(b)(1)(A). The limits interact, and the 30% and 20% limits for other organizations can be lower depending on other gifts made in the year.

The 60% limit for cash applies to taxable years beginning after December 31, 2017, with no ending date in the current text (§ 170(b)(1)(G)(i)).

A contribution above a limit can be carried forward. The excess is treated as a contribution paid in each of the five succeeding taxable years, in order of time, subject to that year’s limit (§ 170(d)(1)(A); § 170(b)(1)(B), (C)(ii), (D)(ii), (G)(ii)). IRS Publication 526 describes the excess as deductible “in each of the next 5 years until it is used up.” The non-itemizer deduction is figured without carryovers (§ 170(p)), so a carryover produces a deduction only in a year in which the donor itemizes. A carryover year in which the donor takes the standard deduction is not skipped: the regulations treat the carryover as paid in that year, though not deductible, up to the room under that year’s limit, which reduces what is left for later years (Treas. Reg. § 1.170A-10(b)(2)).

Which year a gift counts

A contribution is ordinarily made when delivery is effected (Treas. Reg. § 1.170A-1(b)). IRS Publication 526 applies that to common payment methods:

• A check counts on the date it is mailed.
• A charge on a bank credit card counts in the year the charge is made.
• A properly endorsed stock certificate counts on the date of mailing or other delivery to the charity or its agent. A certificate given to the donor’s own agent or to the issuing corporation for transfer counts only when the stock is transferred on the corporation’s books.

The deduction follows the year payment is made (§ 170(a)(1)). A promissory note given to a charity is not a contribution until the note payments are made (Publication 526).

An IRA owner who has reached age 70½ has a different route. A qualified charitable distribution made directly by the IRA trustee to an eligible charity is excluded from gross income, up to the annual limit, rather than deducted (IRC § 408(d)(8)), so it does not depend on itemizing; see qualified charitable distributions.

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