Charitable Contribution Bunching

Charitable Contribution Bunching

Charitable contribution bunching is a tax strategy where a taxpayer consolidates multiple years’ worth of charitable donations into a single tax year. This approach allows the taxpayer to exceed the standard deduction threshold in that year, maximizing the tax benefit received from itemizing deductions.

For example, if an individual typically donates $5,000 annually to charity, they might choose to donate $15,000 in one year instead, while skipping the following two years. By doing so, they can itemize deductions in the year of the larger contribution, potentially reducing their taxable income more significantly than if they spread the donations evenly over multiple years. This strategy is particularly effective in light of the increased standard deduction limits established by the Tax Cuts and Jobs Act of 2017.