Millions of households that once wrote off charitable gifts on their tax returns lost that benefit after the standard deduction nearly doubled. The shift forced a tactical response: donors now concentrate two calendar years of giving into a single return, pushing their itemized total above the standard deduction threshold so the gifts actually reduce their tax bill. The strategy, known as bunching, has gained traction as inflation adjustments keep raising the bar each filing season, and donor-advised funds have become the preferred vehicle for executing it.
How the higher standard deduction erased routine charitable write-offs
The Tax Cuts and Jobs Act, signed into law in late 2017, roughly doubled the standard deduction for all filing statuses. That single change shrank the pool of taxpayers who benefit from itemizing. Before the law took effect, a married couple making modest annual donations of a few thousand dollars could combine those gifts with mortgage interest, state and local taxes, and other deductions to clear the itemizing threshold. After the increase, many of those same households found their total deductions falling short of the new, higher standard amount. The IRS overview of the TCJA’s individual provisions spells out how the enlarged standard deduction reduced the number of filers who itemize.
The Congressional Budget Office reached the same conclusion in its analysis of charitable-giving tax incentives. The agency stated that “the higher standard deduction reduced itemizing,” confirming a behavioral shift among donors who previously claimed gifts on Schedule A. For those households, annual donations no longer produced any tax savings at all, because the standard deduction already exceeded their combined itemized total.
How bunching and donor-advised funds restore the deduction
Bunching solves the math problem by compressing two or more years of planned giving into one tax year. A household that normally donates a set amount each year instead doubles up, making both years’ contributions in a single calendar year. That larger total, combined with other deductible expenses, can push Schedule A above the standard deduction. In the alternate year, the household takes the standard deduction and skips itemizing entirely. Over a two-year cycle, the net charitable spending stays the same, but the tax benefit reappears in the bunching year.
Donor-advised funds act as the logistical bridge. A taxpayer deposits the full two-year amount into a DAF and claims the deduction immediately, then directs the fund to distribute grants to chosen charities on a schedule that mirrors the donor’s original giving pattern. The IRS guidance on donor-advised funds confirms that the contribution is deductible in the year it enters the fund, not when grants are later distributed. That separation of the tax event from the charitable payout is what makes bunching practical for people who want their favorite organizations to receive steady annual support.
The strategy works best for households whose other itemized deductions already bring them close to the standard deduction line. In high-cost states where property taxes and state income taxes are significant, a concentrated charitable gift can be the margin that tips the balance. Taxpayers in those states face the additional constraint of the SALT deduction cap, which limits state and local tax write-offs and makes the charitable portion of Schedule A even more decisive.
