Giving to Indiana University is a powerful expression of belief in our mission. Your generosity makes a positive impact for years to come, helping provide outstanding academic and cultural programs, student services, and broad access to education for students throughout Indiana and beyond.
In addition to the life-changing difference your philanthropy will make, your support of IU can also provide important tax advantages.
Let’s explore some of the options and beneficial tax laws, including charitable gift deductions, gifts of property, IRA gifts, and SECURE 2.0 Act impacts.
One benefit of charitable giving is the income tax charitable deduction that the donor may receive. While it may not be the primary motivation behind giving to charity, it is certainly a nice bonus — but there are some important details to understand.
Generally, gifts to Indiana University are eligible for a federal income tax deduction when you itemize your tax return. The deduction for gifts of cash is limited to 60 percent of your adjusted gross income (AGI) for the tax year (aggregate limit). For a gift of appreciated securities or real estate, the deduction limit is 30 percent of AGI. For gifts that exceed these limitations, you can carry forward the excess deduction for up to five consecutive years.
Harvey’s adjusted gross income last year was $200,000. He made a gift of appreciated stock valued at $80,000. However, he could not deduct the entire $80,000 because it exceeded the 30 percent of his AGI, which is the limitation on gifts of appreciated property (which was $60,000 max, in his case). In his 32 percent tax bracket, the deduction reduced Harvey’s federal income tax by $19,200 (32 percent of $60,000). This year, he can deduct the unused $20,000.
So what can you do if the charitable tax deduction is less than your standard tax deduction? Currently, the standard deduction is fairly high. It may make sense to “bunch” your charitable gifts from two years into a single year to push your charitable deduction higher than the standard deduction, then take the standard deduction the following year.
Jean makes annual cash gifts of $10,000 to Indiana University. However, the standard deduction is $15,000 for single filers in 2025—higher than the $10,000 deduction for which her cash gift would qualify. She decides to give IU $20,000 this year, combining her usual gifts for 2025 and 2026, and itemize her tax return to take the $20,000 deduction.
Do you own property you no longer wish to pay tax on or maintain? Do you own stocks you’d like to remove from your portfolio to achieve a slightly different balance? Before you sell, consider whether these assets could make a rewarding impact on our work in a tax-advantaged way.
When you sell a capital asset (stock, bonds, or real estate), you are taxed on any appreciation in value. If you held the property for one year or more, the amount of appreciation is subject to long-term capital gains tax rates—15 percent for most individuals, with a top rate of 20 percent. (If you held the property for less than one year, the appreciation is taxed at the higher ordinary income tax rates.)
Appreciated property held long term can be an excellent gift option because it offers a double tax benefit. Not only does the gift allow you to bypass any capital gains tax, it also qualifies for a charitable income tax deduction for the full amount of the property.
Many years ago, Celia purchased three acres of land in an undeveloped area for $20,000, thinking she would build a home there when she was ready to retire. Those plans have changed. She considers selling the land, but it is now worth $80,000, meaning she would have to pay $9,000 in capital gains tax (15 percent of $60,000 appreciation).
Instead, Celia decides to use the land to meet her charitable goals and support IU. She not only bypasses the $9,000 in capital gains tax she would have owed had she sold the land, she also qualifies for a deduction for the full $80,000. In her 24 percent tax bracket, the deduction reduces her taxes by $19,200.
Highly appreciated real estate can provide other creative planning opportunities, as well. A bargain sale is one additional option. As a winning combination of part gift and part sale, you can receive cash and benefit from a deduction for a portion of the property’s value. Ask us for more information.
Although IRAs are a retirement savings tool, they also offer unique opportunities for meaningful charitable gifts: qualified charitable distributions (QCDs) and beneficiary designations.
IRA owners age 70½ or older can use a traditional QCD to make a direct transfer from an IRA to IU. Though no charitable deduction is allowed for the gift, no tax is due on the transfer—the entire amount goes to support our work. In addition, the transfer counts toward your required minimum distribution (RMD) if one is due (generally, at age 73). For donors who qualify, the opportunity to satisfy distribution requirements through a tax-free transfer to us is a simple, effective way to give year after year up to the annual aggregate limit ($108,000 in 2025).
IRA owners age 70½ or older have another QCD option: a one-time distribution of up to $54,000 (in 2025) directly from an IRA to create a new charitable gift annuity (CGA) or a charitable remainder trust (CRT), which can be either a charitable remainder unitrust (CRUT) or charitable remainder annuity trust (CRAT). Like the traditional QCD, the tax-free distribution counts toward your RMD if one is due. However, this option allows you to not only make a gift but also secure an income stream from the CGA or CRT.
A few items to note on QCDs:
Another opportunity for supporting Indiana University through your IRA is to name us as a full or partial beneficiary of the account—something you can do at any age. If you are considering a legacy gift and own assets such as appreciated property in addition to your IRA, there is a good reason to consider leaving IRA assets to us and the appreciated property to heirs. Here’s why: retirement assets left to beneficiaries are fully taxable to them when they are withdrawn, and there are requirements for the timing of the withdrawals. By contrast, taxes on appreciated property (securities or real estate) are due only when the asset is sold, so your heirs are taxed only on the amount the property appreciates after the asset becomes theirs. Also, there are no requirements for when the property must be sold.
SECURE 2.0 provisions impact many areas of retirement and tax planning. The following are a few additional items addressed in the legislation that may be of interest.
RMD rules: The age to begin taking required minimum distributions increased from 72 to 73 in 2023, with an increase to 75 scheduled for January 1, 2033.
Special needs trusts: Individuals may now name a charity, such as IU, as a remainder beneficiary of a special needs trust that contains an inherited defined contribution plan or IRA.
Military spouse tax credit: Tax credit availability is expanded for employers under certain conditions.
IRA contributions: In 2025, the limit on catch-up contributions will increase for individuals ages 60–63 to the greater of $11,250 or 50 percent of the regular catch-up amount for the year.
529 account to Roth IRA rollovers: Beneficiaries of 529 accounts (tax-advantaged education savings accounts) that have been open for at least 15 years can now make penalty-free, tax-free rollovers up to $35,000 into a Roth IRA (subject to Roth annual limits).
You have heard the expression, “knowledge is power.” When deciding how to give, we might say, “knowledge is impact.” The better you understand your giving options, including the ways they can help you and your family, the more effectively you can shape your charitable giving plan to meet multiple goals. Please contact us at giftplan@iu.edu or 800-558-8311 if you would like to further discuss gift planning options and innovative, meaningful ways to provide support. Thank you for your thoughtfulness and generosity.
IU Foundation’s Federal Employer Identification Number:(35-6018940)
IU Foundation Gift Planning Services Address:
Post Office Box 500
Bloomington, IN 47402
