3 minute read
Did you know 2025 may be the last full year for your high-net-worth clients to lock in today’s charitable deduction limits?
Beginning in 2026, the One Big Beautiful Bill Act (OBBBA) will make charitable giving less tax-efficient for top earners through two key provisions we call the “haircut” and “shave.”
- The Haircut: Only donations above 0.5% of adjusted gross income (AGI) will be deductible.
- The Shave: Even though top earners will still pay tax at 37%, their deductions will only deliver a 35% benefit - reducing the impact of every dollar donated.
Put simply, these two changes mean clients will give the same, but deduct less.
That’s why 2025 is the final opportunity to help them capture full deduction values before the rules change.
How the CRT–DAF Combo Can Help
For clients with highly appreciated assets, selling outright can trigger steep capital gains.
But with a Charitable Remainder Trust (CRT) and Donor-Advised Fund (DAF) strategy, advisors can help clients turn that tax burden into opportunity.
By establishing a CRT–DAF combination before year-end, clients can:
- Eliminate capital gains taxes on appreciated assets at the point of sale
- Potentially create lifetime income
- Receive an immediate charitable deduction
- Build a legacy that engages their family for years to come
- Keep charitable assets under your management through the DAF
We help advisors implement both - a CRT to convert appreciated assets into income and a DAF to carry the remainder forward under your continued management.
Why Act Before Mid-December?
Because most charitable gifts happen in December - but by then, it’s often too late for complex planning and you risk missing out before the year-end rule changes.
Non-cash donations like stock or real estate must be processed by mid-December to qualify for 2025 deductions, and establishing CRTs and DAFs takes time. Acting now ensures your clients can maximize their tax benefits before the OBBBA haircut and shave take effect.
Your Next Step
The clock is ticking on 2025 charitable planning.
Download Dunham’s free guide (click here or the image below) to see how a CRT–DAF strategy can help your clients lock in today’s deduction limits.
Then, speak with a Dunham Business Development team member to learn how we can help you implement this strategy before the OBBBA haircut and shave take effect.
Disclosures:
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance. All examples are hypothetical and are for illustrative purposes only.
Information contained in the materials included is believed to be from reliable sources, but no representations or guarantees are made as to the accuracy or completeness of information. This document is provided for information purposes only and should not be considered as investment advice.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA / SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc. Trust services offered through Dunham Trust Company, an affiliated Nevada Trust Company.