Philanthropic individuals and families and their advisors continue to watch the status of SECURE Act 2.0 because of the enhancements it proposes to the rules for Qualified Charitable Distributions (QCD) and its changes to the ages for Required Minimum Distributions (RMD).  

The proposed version of SECURE Act 2.0 that passed the House in March of this year improves the Qualified Charitable Distribution (“QCD”) by annually indexing the $100,000 cap for inflation. Additionally, the legislation would allow a taxpayer to make a one-time QCD of up to $50,000 to a charitable gift annuity or a charitable remainder trust. The beginning age for RMDs now is 72.  Both the House and Senate versions of SECURE Act 2.0 will gradually increase the age to 75 over several years, but QCDs can still begin at 70½ years of age. The Senate’s SECURE Act 2.0, known as the EARN ACT, awaits a vote in the Senate, and could pass through Congress by the end of the year.

Another important issue with tax implications is the Tax Cuts and Jobs Act of 2018.  It included several changes to the tax rules for individuals that are set to expire after the close of the 2025 tax year. Unless those provisions are extended, the sunsets could impact tax planning for philanthropic families and individuals. For example, the standard deduction will decrease by nearly half, adjusted for inflation. This means some clients may once again itemize their deductions, thereby influencing charitable giving income tax strategies. In addition, the estate and gift tax exemption amount, increased under the Tax Cuts and Jobs Act, will be cut down so that in 2026 the exemption amount will be approximately $6.2 million adjusted for inflation. This will impact not only estates valued above the current exemption amount of $12.06 million but also estates valued in the $6 to $12 million range. Because assets transferred through lifetime gifts and bequests to charitable organizations are not subject to gift or estate tax, philanthropy may be an effective tax planning tool for even more taxpayers after 2025.  

As your clients begin to set their philanthropic goals for the next several years, the team at the Community Foundation is happy to help structure long-term strategies to maximize not only your clients’ tax benefits, but also the benefits to the community. The Foundation’s professionals are deeply familiar with the short-term, mid-term, and long-term needs of our community, as well as the nonprofits that are working to address those needs. Our experienced team works with advisors to help clients support community needs now and in the future through clients’ donor advised funds, field of interest funds, designated funds, and other vehicles established at the Community Foundation. We strive to align the interests of everyone involved: the client, the client’s charities, and the trusted advisor.  

If you'd like to learn more about how the Community Foundation can help you and your clients or to answer your questions about philanthropy, reach out to Brandon Butterworth, Vice President of Philanthropic Services, at bbutterworth@cfrichmond.org.