Taxes
Zoe Team
10 min read
Donating appreciated assets like stocks avoids capital gains tax while providing a full market-value deduction.
Qualified Charitable Distributions allow retirees to donate IRA funds directly to charity, reducing taxable income.
Donor-Advised Funds offer flexibility, letting donors receive immediate tax deductions while choosing charities later.
You avoid capital gains taxes on the asset’s growth and receive an income tax deduction for its full market value.
A direct transfer of up to $100,000 annually from an IRA to a public charity, which is not counted as taxable income.
You make an irrevocable contribution to a fund, receive an immediate tax deduction, and recommend grants to charities over time.
Have you ever made someone so happy that you remember it to this day? What if you could add a tax benefit to that feeling?
Have you ever made someone so happy that you remember it to this day? What if you could add a tax benefit to that feeling? There’s a reason why people dedicate so much time and effort to giving, volunteering, and acts of kindness. For some, it’s being polite, saying thank you, giving a compliment or a thoughtful gift to a loved one. For others, it’s donating clothes, toys, money, and time. Regardless of the act, charitable giving is a powerful force for good. We underestimate the value of small actions, and sometimes we may even think they’re pointless. They’re not.
There’s a reason why the most thoughtful gifts are the ones that make us happier. When we know the time and thought that was put into the gift, we appreciate it more. The thing about giving is that it has to be done wisely, at the most effective times, and in a way that adds meaning to your life. If done in this way, charity can improve the life of the giver, the receiver, and the entire community.
In fact, various studies show that people are happier when they give! Yet every person has a different situation (cause, preference, or donation amount) that brings a smile to their face. What if you could make that smile even bigger through an added tax benefit?
One of the most notable tangible benefits of charitable giving is the tax reduction it creates. Read on to discover the most effective and popular ways to give effectively from a tax minimization perspective.
Did you know Congress has limits on the amount that can be deducted each year for charitable giving? These limits are relative to the taxpayer’s Adjusted Gross Income (AGI) and vary depending on the type of donation that is made.
While the actual rules are overly complicated, a general simplification is that a taxpayer can deduct up to 60% of their AGI if they donate cash and 30% of their AGI if they donate appreciated assets held for more than 1 year.
Any amounts donated that exceed these limits can be carried over for, in most cases, up to 5 years until the excess is used up. For example, a taxpayer may not know what their AGI will be when they make a gift, or they may desire to give a large gift all at once. The ability to carry over the deduction to future years keeps the taxpayer from losing the tax benefit of the gift.
Let’s navigate through the strategies that, if implemented appropriately and consistently over time, can provide the most significant tax savings:
As opposed to donating cash, donating appreciated assets (like stocks) provides two tax benefits:
Deductible value of the donation
No tax on the capital gain.
For highly appreciated assets, this method of charitable giving is extremely tax efficient. In addition to saving the tax on the gain in value, you also get to deduct the full market value of the donation against your earned income. Taxpayers in the highest marginal tax bracket who also pay state income tax can reduce taxes due by 60% to 70% of the market value of the donation using this method.
For example, let’s say a taxpayer in the 37% tax bracket living in a state with 5% state income tax, paid $1,000 for an asset over 12 months ago that is now worth $10,000. If they donate the asset in kind to a public charity, in addition to not paying 28.3% of the $9,000 gain, they will receive an income tax deduction for the full $10,000 market value of the donation. The total amount of taxes saved from this donation would be around $6,750 or 67.5% of the market value of the gift.
While almost any appreciated assets can be donated, publicly traded stocks and real estate are two of the most common. Let’s take a look at each one:
Publicly traded stock is one of the easiest ways to support a charity. Because publicly traded stocks are priced every day in the market, the value of the stock is readily available. In addition, many charities have a brokerage account established, and they can provide you with instructions to transfer the shares into their account. You’ll want to transfer the assets in kind rather than selling them so that you don’t have to pay the capital gains taxes on the appreciated stock.
Keep in mind that if you have a stock with a capital loss (meaning that the current value is less than what you paid for it), then you’ll want to sell the stock first, and then donate cash. That way, you can take advantage of the capital loss on your taxes.
Like a privately held business, real estate often has significant unrealized capital gains. Donating a portion of or an entire property can be another way to support your favorite charity while also reducing your taxes. However, donating real estate can be a little more complicated. In general, the charity will want to liquidate the property quickly. So, if you have some real estate you’re looking to donate, talk to the charity to see if they’d be interested in receiving the gift. If not, consider a DAF. Some DAFs specialize in receiving donations of complex assets, like a condo in Shanghai.
If you’re getting ready to sell all or a portion of your ownership in a privately held business, you may be worried about the tax implications of doing so. Donating a portion of your business to a charity before you sell can be a great way to reduce the tax impact of the sale. If you use a DAF to facilitate the donation, you can wait to decide which charity to grant the money to in future years. As not all charities are set up to take ownership of privately held businesses, you will either need to work with a charity that is able to receive this type of gift or donate to a DAF. More on that later.
Because the value of a privately held business is not readily available, this type of gift usually requires some legal documentation as well as an appraisal by an independent third party to determine the value of the donation. Given the cost of the legal documents and appraisal, large donation amounts are required to make it worthwhile.
Some other key points to keep in mind are that some company structures and operating agreements may not allow for this type of ownership transfer, so it is important to have your documents reviewed prior to agreeing to a transaction. In addition, the IRS requires that the donation is made before the transaction is finalized, which may create an issue if the deal were to fall through for any reason. It is recommended that you work with experienced professionals for this type of transaction.
Many charitably minded individuals have significant assets accumulated in tax-deferred accounts, like an IRA. Once these individuals turn age 72 (or age 70 ½ before 2020), they must start taking required minimum distributions, or RMDs, from these accounts. However, many individuals don’t need the funds they are required to distribute. Fortunately, you’re allowed to transfer up to $100,000 per year directly to a qualified public charity in what’s known as a qualified charitable distribution, or QCD. In addition, these QCDs can begin once someone reaches age 70 ½, even before RMDs begin at age 72. Because the funds are transferred directly to the public charity, the amount donated does not count as income to the taxpayer even though it satisfies the requirement for the distribution.
Given that many taxpayers at age 70 and above are taking the standard deduction, and various government benefits such as Medicare premiums are calculated based on AGI, being able to not recognize the income from the RMD allows the taxpayer to benefit from the full donation as if it were a deduction while reducing the AGI.
A variety of charitable trusts are available, including Charitable Remainder Trusts (both annuity and unitrusts) and Charitable Lead Trusts (both annuity and unitrusts). These trusts are irrevocable and can be expensive to establish.
Typically, other charitable arrangements (like a DAF or a CGA) can accomplish the objectives of a donor in a more cost-effective way than a trust. But if you’re considering establishing a charitable trust, talk to an estate attorney who can help you determine whether such a trust is right for you.
Cash donations are the most straightforward way to give, but they are also the least efficient. Because cash donations do not include any appreciation or unrealized gain in value, donors only receive an income tax deduction for the value of the cash donated.
In addition, if the value of the other itemized deductions for the year does not exceed the standard deduction, there is either only a partial or potentially no tax benefit for the donation. However, many charitably minded individuals may not own any appreciated assets outside of a retirement account, in which case cash may be the only option.
The only other reason why someone might give cash over the other options outlined above is that cash donations are allowed a higher AGI limit (60% normally and 100% in 2021) than other forms of giving. So, for individuals who want to maximize their tax deductions, giving cash may be beneficial.
A donor-advised fund, or DAF, is a great way to give that allows donors to separate the decision of how much to give from the decision of where to give.
A DAF is a fund held by a DAF sponsor, which is a public charity, and contributions to a DAF are irrevocable gifts to that charity (DAF sponsor).
The donor can then advise the DAF sponsor to make grants to an operating charity of their choosing at any point in the future.
Until the money is granted to a charity, the donor or their advisor can continue to direct how the money is invested and benefit from the growth of the account.
There is no requirement to give a certain amount of money each year, and the DAF can last into perpetuity.
Most DAFs allow grants to any recognized 501(c)(3) organization. Thus, DAFs offer a great way to donate in one year and receive the full tax benefit for the donation, then make decisions of which charity to support in future years.
A private foundation can be a good option when a high net worth donor wants more flexibility in grant-making than can be accomplished through a DAF. It can also be a good option if they want to employ family members (i.e., pay them for their time) or others as they engage in philanthropy.
However, private foundations are subject to an annual 5% payout requirement, where 5% of the value of the endowment must be distributed each year; otherwise, they are subject to a 30% excise tax. Many families have found that a DAF gives them the flexibility they need with considerably less cost, administrative burden, and oversight than a private foundation.
Impact investing may or may not provide tax benefits, but it is a way for people to support a cause that is important to them while hopefully receiving a positive return on their investment. Often, the motivation behind impact investing is to set up a business or organization that provides some social benefit in a sustainable way so that the initial investment can be used to help for many years to come as compared to a one-time gift.
Some DAFs allow for impact investing within the DAF. By using a DAF to facilitate impact investing, the contributions to the DAF were already tax-deductible, so donors are often less concerned about the returns they receive when they engage in impact investing.
Have you ever made someone so happy that you remember it to this day? What if you could add a tax benefit to that feeling?
Have you ever made someone so happy that you remember it to this day? What if you could add a tax benefit to that feeling? There’s a reason why people dedicate so much time and effort to giving, volunteering, and acts of kindness. For some, it’s being polite, saying thank you, giving a compliment or a thoughtful gift to a loved one. For others, it’s donating clothes, toys, money, and time. Regardless of the act, charitable giving is a powerful force for good. We underestimate the value of small actions, and sometimes we may even think they’re pointless. They’re not.
There’s a reason why the most thoughtful gifts are the ones that make us happier. When we know the time and thought that was put into the gift, we appreciate it more. The thing about giving is that it has to be done wisely, at the most effective times, and in a way that adds meaning to your life. If done in this way, charity can improve the life of the giver, the receiver, and the entire community.
In fact, various studies show that people are happier when they give! Yet every person has a different situation (cause, preference, or donation amount) that brings a smile to their face. What if you could make that smile even bigger through an added tax benefit?
One of the most notable tangible benefits of charitable giving is the tax reduction it creates. Read on to discover the most effective and popular ways to give effectively from a tax minimization perspective.
Did you know Congress has limits on the amount that can be deducted each year for charitable giving? These limits are relative to the taxpayer’s Adjusted Gross Income (AGI) and vary depending on the type of donation that is made.
While the actual rules are overly complicated, a general simplification is that a taxpayer can deduct up to 60% of their AGI if they donate cash and 30% of their AGI if they donate appreciated assets held for more than 1 year.
Any amounts donated that exceed these limits can be carried over for, in most cases, up to 5 years until the excess is used up. For example, a taxpayer may not know what their AGI will be when they make a gift, or they may desire to give a large gift all at once. The ability to carry over the deduction to future years keeps the taxpayer from losing the tax benefit of the gift.
Let’s navigate through the strategies that, if implemented appropriately and consistently over time, can provide the most significant tax savings:
As opposed to donating cash, donating appreciated assets (like stocks) provides two tax benefits:
Deductible value of the donation
No tax on the capital gain.
For highly appreciated assets, this method of charitable giving is extremely tax efficient. In addition to saving the tax on the gain in value, you also get to deduct the full market value of the donation against your earned income. Taxpayers in the highest marginal tax bracket who also pay state income tax can reduce taxes due by 60% to 70% of the market value of the donation using this method.
For example, let’s say a taxpayer in the 37% tax bracket living in a state with 5% state income tax, paid $1,000 for an asset over 12 months ago that is now worth $10,000. If they donate the asset in kind to a public charity, in addition to not paying 28.3% of the $9,000 gain, they will receive an income tax deduction for the full $10,000 market value of the donation. The total amount of taxes saved from this donation would be around $6,750 or 67.5% of the market value of the gift.
While almost any appreciated assets can be donated, publicly traded stocks and real estate are two of the most common. Let’s take a look at each one:
Publicly traded stock is one of the easiest ways to support a charity. Because publicly traded stocks are priced every day in the market, the value of the stock is readily available. In addition, many charities have a brokerage account established, and they can provide you with instructions to transfer the shares into their account. You’ll want to transfer the assets in kind rather than selling them so that you don’t have to pay the capital gains taxes on the appreciated stock.
Keep in mind that if you have a stock with a capital loss (meaning that the current value is less than what you paid for it), then you’ll want to sell the stock first, and then donate cash. That way, you can take advantage of the capital loss on your taxes.
Like a privately held business, real estate often has significant unrealized capital gains. Donating a portion of or an entire property can be another way to support your favorite charity while also reducing your taxes. However, donating real estate can be a little more complicated. In general, the charity will want to liquidate the property quickly. So, if you have some real estate you’re looking to donate, talk to the charity to see if they’d be interested in receiving the gift. If not, consider a DAF. Some DAFs specialize in receiving donations of complex assets, like a condo in Shanghai.
If you’re getting ready to sell all or a portion of your ownership in a privately held business, you may be worried about the tax implications of doing so. Donating a portion of your business to a charity before you sell can be a great way to reduce the tax impact of the sale. If you use a DAF to facilitate the donation, you can wait to decide which charity to grant the money to in future years. As not all charities are set up to take ownership of privately held businesses, you will either need to work with a charity that is able to receive this type of gift or donate to a DAF. More on that later.
Because the value of a privately held business is not readily available, this type of gift usually requires some legal documentation as well as an appraisal by an independent third party to determine the value of the donation. Given the cost of the legal documents and appraisal, large donation amounts are required to make it worthwhile.
Some other key points to keep in mind are that some company structures and operating agreements may not allow for this type of ownership transfer, so it is important to have your documents reviewed prior to agreeing to a transaction. In addition, the IRS requires that the donation is made before the transaction is finalized, which may create an issue if the deal were to fall through for any reason. It is recommended that you work with experienced professionals for this type of transaction.
Many charitably minded individuals have significant assets accumulated in tax-deferred accounts, like an IRA. Once these individuals turn age 72 (or age 70 ½ before 2020), they must start taking required minimum distributions, or RMDs, from these accounts. However, many individuals don’t need the funds they are required to distribute. Fortunately, you’re allowed to transfer up to $100,000 per year directly to a qualified public charity in what’s known as a qualified charitable distribution, or QCD. In addition, these QCDs can begin once someone reaches age 70 ½, even before RMDs begin at age 72. Because the funds are transferred directly to the public charity, the amount donated does not count as income to the taxpayer even though it satisfies the requirement for the distribution.
Given that many taxpayers at age 70 and above are taking the standard deduction, and various government benefits such as Medicare premiums are calculated based on AGI, being able to not recognize the income from the RMD allows the taxpayer to benefit from the full donation as if it were a deduction while reducing the AGI.
A variety of charitable trusts are available, including Charitable Remainder Trusts (both annuity and unitrusts) and Charitable Lead Trusts (both annuity and unitrusts). These trusts are irrevocable and can be expensive to establish.
Typically, other charitable arrangements (like a DAF or a CGA) can accomplish the objectives of a donor in a more cost-effective way than a trust. But if you’re considering establishing a charitable trust, talk to an estate attorney who can help you determine whether such a trust is right for you.
Cash donations are the most straightforward way to give, but they are also the least efficient. Because cash donations do not include any appreciation or unrealized gain in value, donors only receive an income tax deduction for the value of the cash donated.
In addition, if the value of the other itemized deductions for the year does not exceed the standard deduction, there is either only a partial or potentially no tax benefit for the donation. However, many charitably minded individuals may not own any appreciated assets outside of a retirement account, in which case cash may be the only option.
The only other reason why someone might give cash over the other options outlined above is that cash donations are allowed a higher AGI limit (60% normally and 100% in 2021) than other forms of giving. So, for individuals who want to maximize their tax deductions, giving cash may be beneficial.
A donor-advised fund, or DAF, is a great way to give that allows donors to separate the decision of how much to give from the decision of where to give.
A DAF is a fund held by a DAF sponsor, which is a public charity, and contributions to a DAF are irrevocable gifts to that charity (DAF sponsor).
The donor can then advise the DAF sponsor to make grants to an operating charity of their choosing at any point in the future.
Until the money is granted to a charity, the donor or their advisor can continue to direct how the money is invested and benefit from the growth of the account.
There is no requirement to give a certain amount of money each year, and the DAF can last into perpetuity.
Most DAFs allow grants to any recognized 501(c)(3) organization. Thus, DAFs offer a great way to donate in one year and receive the full tax benefit for the donation, then make decisions of which charity to support in future years.
A private foundation can be a good option when a high net worth donor wants more flexibility in grant-making than can be accomplished through a DAF. It can also be a good option if they want to employ family members (i.e., pay them for their time) or others as they engage in philanthropy.
However, private foundations are subject to an annual 5% payout requirement, where 5% of the value of the endowment must be distributed each year; otherwise, they are subject to a 30% excise tax. Many families have found that a DAF gives them the flexibility they need with considerably less cost, administrative burden, and oversight than a private foundation.
Impact investing may or may not provide tax benefits, but it is a way for people to support a cause that is important to them while hopefully receiving a positive return on their investment. Often, the motivation behind impact investing is to set up a business or organization that provides some social benefit in a sustainable way so that the initial investment can be used to help for many years to come as compared to a one-time gift.
Some DAFs allow for impact investing within the DAF. By using a DAF to facilitate impact investing, the contributions to the DAF were already tax-deductible, so donors are often less concerned about the returns they receive when they engage in impact investing.
Disclosures: Zoe Financial, Inc. ("Zoe Financial") is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Zoe Financial provides investment advisory services and access to independent registered investment advisers through its platform. The information provided by Zoe Financial is for educational and informational purposes only and should not be construed as personalized investment advice or as an offer to buy or sell any security. All investments involve risk, including possible loss of principal. Past performance is not indicative of future results. Clients should consult with their own financial, tax, or legal professionals before making any investment decisions. The material presented by Zoe Financial is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Material presented has been gathered from sources believed to be reliable, however Adviser cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Past performance is no guarantee of future results. Zoe Financial does not provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice. SEC Registration does not constitute an endorsement of Zoe Financial by the SEC nor does it indicate that Zoe Financial has attained a particular level of skill or ability. The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be appropriate for all clients. Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable offering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Lower expenses do not guarantee better investment performance. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may differ materially from those reflected or contemplated in such forward-looking statements.
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2026 Zoe Financial, Inc. | All rights reserved
Find an Advisor
Retirement Planning
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2026 Zoe Financial, Inc. | All rights reserved
Find an Advisor
Retirement Planning
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2025 Zoe Financial, Inc. | All rights reserved
