💌 Today’s Thing: The Season of Giving and YOU — A Brief Word About Taxes, Donations and Gifts
Ok, who’s been around long enough to remember when you first heard these lyrics:
“One of these things is not like the others One of these things doesn’t belong Can you tell which thing is not like the other By the time we finish our song?”1
– Sesame Workshop
This Sesame Street classic could be seen as very appropriate when distinguishing between a gift and a donation or contribution. At year’s end everyone is running about getting holiday gifts for Christmas Day…for people they love…or maybe people they want to love, or maybe even used to love. Being the bearer of holiday gifts is wonderful – but it won’t be deductible come next April 15th. Not unless its spouse, but more on that later.
At the same time, tax-exempt organizations2 – e.g., religious, food pantries, universities, medical and/or scientific research, etc., are seeking charitable donations from the same people, hoping to catch them in the same spirit of giving. Your contributions to these organizations are eligible for tax deductions, but with limitations.
This edition of the newsletter is extremely brief. It’s really a setup for what I’m going to discuss further in January. Tax clarity on the possible implications of what you give –
to whom,
when, and
how much.
🧾 The One Big, Beautiful Bill Act (OBBBA): Big on the Giving Changes. But where is the Beauty?
“Beauty is in the eye of the beholder.”3
– Plato
While the ancient quote is attributed to the Greek philosopher Plato, its applicability to tax law will be evaluated by accountants, lawyers and judges. Only time will tell how taxpayers feel the “beautiful” touches their wallets.
DOnations?…GIfts?
The OBBBA overhauls the tax code section IRC §170 dealing with the tax deduction for charitable contributions and to a limited extent, some types of gifts. Even the title of section, “Charitable, etc., contributions and gifts” is confusing. The most obvious substantive change will be a deduction of up to $1,000 available for taxpayers who do not itemize on their tax return, and up to $2,000 per couple filing jointly4.
Gifts are taxable to the donor above a certain amount, unless the recipient is a qualified charitable organization. In 2025 and 2026 that amount is $19,000 to each recipient (done). For a married couple, that amount applies to each spouse, i.e., a total of $38,0005. There is also a tax provision for full deduction of the value of a gift to one’s spouse who is a U.S. citizen6.
Charitable organizations often frame the contributions they receive as “gifts.” Just listen to some of the television commercials. However, identifying giving as a “gift” for tax purposes should be considered very carefully. The terms “donations”, “contributions”, and “gifts” are not interchangeable. I’ll come back to those differences and the concept of “donative intent” in future newsletters between the turn of the new year and April 15th.
There’s the scoop, everyone! Thanks for taking the time to check out this week’s edition of the Tax Clarity Newsletter.
This is the final edition of 2025. Three months ago, I started this journey to bring you some clarity about how tax laws impact you and can influence your decisions.
Many thanks to all of you who take a moment of your day to give this publication a read.
A special shoutout to all of you who subscribe! There will be some exciting changes to come in 2026. I wish everyone a joyous holiday season full of peace, love and rejuvenation to meet the new year!
As always please provide any feedback about the content by sending an e-mail to admin@sweetclarity.com.
DISCLAIMER:The information in this newsletter is derived from public information, provided for education purposes. It is not provided as a financial advisory service and should not be relied upon as such. For advice on a specific tax matter, please consult a tax professional.
