How bunching works — the idea in plain English

Bunching charitable contributions means planning the timing of your donations so you give more in one tax year and little or nothing in the next. The goal is to push your total itemized deductions above the standard deduction in the year you make the larger gifts, which makes itemizing worthwhile. In non-bunch years you typically take the standard deduction.

This strategy became common after the Tax Cuts and Jobs Act of 2017 roughly doubled the standard deduction; more taxpayers found the standard deduction larger than their itemized totals, so bunching became a way to preserve the tax benefit of charitable giving.

Note: this article explains mechanics and real-world uses but does not replace tailored tax advice. Consult your CPA or tax advisor for your situation (see disclaimer at the end).

Why bunching can improve your tax outcome

  • It increases the chance that your itemized deductions exceed the standard deduction in a given year, producing a tax benefit.
  • It lets you take advantage of larger deductions in a higher-income or higher-tax-rate year, which may produce a bigger tax savings than spreading gifts into low-rate years.
  • When paired with a donor-advised fund (DAF), bunching lets you lock in a deduction in one year while distributing grants to charities over several years.

Authority: for basic IRS rules on deductible contributions and qualifying charities, see IRS — Charitable Contributions (Publication 526) and the IRS standard deduction page for current thresholds.

Who benefits most from bunching

  • Taxpayers who regularly donate but whose total annual deductions are close to — but typically below — the standard deduction.
  • Households who expect large fluctuations in income or foresee a year with unusually high taxable income (a sale of a business, exercised stock options, large IRA distributions).
  • Donors planning multi-year giving commitments who want to maximize the tax benefit without reducing long-term philanthropic support.

In my practice, I often recommend bunching to married couples whose itemizable expenses (charity, mortgage interest, state and local taxes) hover near the standard deduction: a one- or two-year concentrated giving plan typically produces the best net tax outcome.

How to implement bunching: step-by-step

  1. Measure the baseline. Add up likely itemized deductions for the next 2–3 years: charitable gifts, mortgage interest, state and local taxes (SALT cap considerations), medical expenses, and other deductible costs.
  2. Compare to the standard deduction. If combined multi-year totals suggest you could exceed the standard deduction by concentrating gifts, compute several scenarios.
  3. Choose a vehicle for bunching. Many donors use cash gifts directly, appreciated securities, or a donor-advised fund (DAF). Contributing to a DAF gives an immediate tax deduction in the year of the contribution while allowing grants to charities over future years. See our practical DAF guides: “Donor-Advised Funds: Pros, Cons, and Use Cases” and “Bunching Donations with Donor-Advised Funds: Year-by-Year Guide” for implementation examples and pros/cons.
  1. Consider the type of asset to give. Cash is straightforward. Donating appreciated stock or mutual fund shares can be more tax-efficient because you may avoid capital gains while deducting fair market value (subject to percentage limits).
  2. Check AGI limits and carryforwards. Deductions for charitable contributions are limited by adjusted gross income (AGI) thresholds: for example, cash gifts to public charities are generally subject to a higher AGI ceiling than gifts of appreciated property (consult current IRS guidance). If your deduction exceeds AGI limits, you can carry forward the excess for up to five years (IRS rules).
  3. Time the gift. A donation counts in the tax year the charity receives it (or a donor-restricted DAF contribution is accepted) — generally by Dec. 31 to count for that year. For payroll-based gifts, deductions follow employer withholding rules.
  4. Keep records. For any cash gift of $250 or more, get a contemporaneous written acknowledgement from the charity. For non-cash gifts over $500 you must file Form 8283; for many gifts over $5,000 you need a qualified appraisal.

Helpful IRS links: Form 8283 and Publication 526 provide detailed substantiation rules. See IRS — Charitable Contributions (Publication 526).

Real-world examples (illustrative)

Example A — Two-year household plan (simple math example)

  • Typical charitable giving: $6,000 per year.
  • Bunch approach: donate $12,000 in Year 1 (either directly or into a DAF) and $0 in Year 2.
  • Result: If $12,000 plus other itemized expenses exceeds the standard deduction in Year 1, you itemize that year and take the standard deduction in Year 2. The couple realizes a larger deduction in Year 1 than they would by spreading gifts and may save more tax overall.

Example B — Using appreciated securities to bunch

  • Instead of cash, a donor gives appreciated stock worth $30,000 to a DAF. They get a current-year deduction for the fair market value and avoid capital gains tax on the appreciation. Grants from the DAF to charities occur over several years.

These numbers are for illustration only; run this through a tax model or with your advisor to see the after-tax effect.

Practical considerations and limits

  • Timing precision matters. A gift is deductible in the year it is legally made or received by the charity. Donor-advised fund contributions are deductible when made to the DAF—not when the DAF grants to operating charities.
  • Donor-advised fund trade-offs. DAFs offer convenience and timing flexibility, but contributions to a DAF are irrevocable and are immediately deductible; distributions later are not tax-deductible. See our DAF primers for deeper detail.
  • Substantiation rules you must follow: written acknowledgment for gifts $250 or more, Form 8283 for non-cash gifts > $500, and appraisals for certain high-value gifts.
  • AGI percentage limits: deductions for charitable gifts are limited relative to your AGI and vary by gift type. If you exceed those limits you may carry forward excess contributions for up to five years (IRS guidance).

Common mistakes and how to avoid them

  • Forgetting documentation: don’t assume a canceled check is enough for large gifts — get the charity’s written acknowledgement and save receipts.
  • Treating DAF grants as deductible: only the initial contribution to a DAF is deductible. Grants from your DAF to charities are not additional deductions.
  • Overlooking AMT/state tax interactions: bunching can change the interplay of state and federal deductions; model both federal and state outcomes.
  • Neglecting long-term philanthropic plans: don’t bunch to the point that it reduces your charitable support in other years unless that aligns with your goals.

When not to bunch

  • If your total 2–3 year deductions clearly fall short of the standard deduction even after bunching large gifts, bunching won’t help.
  • If you need to preserve liquidity or anticipate significant cash needs in the bunch year, avoid concentrating large outflows.
  • If you have estate or gift-plan reasons to spread donations differently (e.g., charitable remainder trusts or bequests), other tools may be preferable.

Checklist before you execute a bunching plan

  • Run a 2–3 year tax projection that includes projected income, tax rates, and deductions.
  • Decide whether to use a DAF or give directly.
  • Confirm the charity qualifies under IRS rules and will provide proper acknowledgements.
  • Obtain valuations/appraisals for non-cash gifts when needed.
  • Coordinate with your tax preparer and financial planner.

Frequently asked quick answers

  • Can I carry forward unused charitable deductions? Yes — if you exceed AGI limits, excess charitable deductions can generally be carried forward up to five years (IRS rules).
  • Do I need a receipt for every gift? For cash gifts of $250 or more, you must have written acknowledgement from the charity. For smaller gifts keep bank or credit-card records.
  • Are gifts to family foundations the same as public charities? No — deduction limits and rules differ between public charities, private foundations, and donor-advised funds; check specific rules.

Professional disclaimer

This article is educational and not individualized tax advice. Tax law and IRS limits change; verify current rules with the IRS (see links above) and consult a tax professional or financial planner before executing a bunching plan.

{In my practice I’ve helped households increase the tax efficiency of their giving by combining forecasting, vehicle selection (DAF vs direct gifts), and careful documentation. A disciplined bunching plan can protect your charitable intent while optimizing tax outcomes.}