Your 2025 guide to holiday giving

Along with holiday celebrations and family gatherings, the spirit of giving helps make this season so magical. For many, that includes giving not only to family and friends but also to charities aligned with your values.

Here are some financially smart strategies to help you support the people and causes you value most.

There are many creative and traditional ways to give back.

• One strategy is to contribute to a donor advised fund (DAF), such as the Morgan Stanley Global Impact Funding Trust (MS GIFT). When you donate to a DAF, you may take a federal income tax deduction in the year the donation is made, subject to certain limitations.[i] The assets donated to the DAF can then stay invested and potentially grow, tax-free, until you recommend which charities you want to receive a cash donation, giving you and your family time to decide where your gift could have the greatest impact.
• Moreover, if you’ve been investing for a while, you may hold securities that have appreciated significantly. Donating appreciated securities may help to reduce the potential tax hit from capital gains that you might otherwise incur by selling the securities and subsequently donating the cash.
• If you’re retired, consider donating your retirement distribution to charity. If you’re at least 70½ and are the owner of an Individual Retirement Account (IRA) or Inherited IRA, you can usually make a Qualified Charitable Distribution (QCD) to an eligible organization of up to $108,000 per year (as indexed for inflation for tax year 2025) directly from your IRA. QCDs generally come with no tax costs to you or the charity receiving the donation—allowing you to count a QCD toward your required minimum distribution for the year if certain rules are met, reduce your taxable estate, and feel good about supporting a cause you care for.²
• To help make the most of potential tax benefits, evaluate front-loading future gifts in 2025. Under the One Big Beautiful Bill Act (OBBBA), starting in 2026, charitable deduction benefits will be capped at 35% for taxpayers in the top federal income tax bracket, rather than at their 37% tax bracket for 2025.³ Front-loading large future gifts before the end of 2025 may help lock in the full 37% deduction value before the cap takes effect.

Giving gifts to family members remains a cherished part of the holiday routine for many families, and the chance to reconnect may have you considering how to best give to family. These simple questions can help: 

• Do you want to give family members a financial gift? If so, remember that you can give up to $19,000 per individual this year without having to file a gift tax return ($38,000 if married and electing to split gifts). However, gifts exceeding $19,000 per individual count against your lifetime federal gift and estate tax exemption of $13.99 million per individual (and $27.98 million per married couple) in 2025. 
• Does your loved one need money to pay bills or fund other basic necessities? 
  • If Yes: Do they need it more this year than other years? Should you increase the amount? This might be the year to think closely about how your generosity can best help.
  • If No: Are they saving toward something (education, a house, a passion project) that you could contribute to? If you know a loved one who struggles to save, funding an initiative directly, such as college tuition, which is not subject to the gift tax limitations, might make a great gift.
• Have you considered opening or contributing to a 529 education savings plan? A 529 plan is an investment vehicle established for paying qualified education expenses of the designated beneficiary. Earnings potentially grow tax-free, and withdrawals are generally exempt from tax, if you use the funds for qualified education expenses, including post-secondary education, private school tuition or fees for credentials such as professional licenses or certificates.⁴ Anyone, including grandparents, can contribute up to $19,000 per year ($38,000 for married couples electing to split gifts) to any individual’s 529 plan per beneficiary, without reducing one’s lifetime gift and estate tax exemption amount. In addition, you can bundle five years of contributions into one $95,000 contribution ($190,000 for married couples electing to split gifts) per beneficiary, provided you make the required election on a gift tax return for the year of the contribution.⁵  

As the holidays approach, prioritizing your own financial well-being can ensure a sound start to the new year.

Morgan Stanley’s fourth-quarter 2025 Wealth Management Pulse Survey found that nearly half of respondents (47%) feel that high inflation is still a top concern when it comes to their portfolio, followed by tariffs (33%) and market volatility (21%).⁶

Staying focused on your goals can help you avoid getting too anxious about your portfolio.

Article Footnotes

¹ The federal income tax deductibility of contributions to a donor-advised fund are subject to certain limitations. These may include but may not be limited to: Donating long-term appreciated securities may be eligible for a federal income tax deduction of the full fair-market value of the asset, up to 30 percent of adjusted gross income (AGI). Donating cash may be eligible for a maximum federal income tax deduction of 60% of AGI. For long-term appreciated gifts of artwork, antiques, books and other tangible personal property, the deductibility rules depend on how the qualifying charity uses the gift. There are additional asset classes and types of contributions which may have additional and/or different limitations. Also, the tax deduction is only available for taxpayers who itemize deductions. Clients should consult with their tax advisor on the income tax implications and tax planning around gifting activity.

² One thing to keep in mind is that the SECURE 2.0 Act raised the starting required minimum distribution (RMD) age to 73 for individuals born on January 1, 1951, through and including December 31, 1959. As a reminder,  ongoing SIMPLE and SEP IRAs (including SAR-SEP IRAS) are not eligible for QCDs. An SEP or SIMPLE IRA is considered ongoing if the employer made a contribution (including a salary reduction contribution to a SAR-SEP or SIMPLE IRA) for the year in which the QDC would be made. If you make a tax deductible IRA contribution after age 70 ½, the amount you can exclude from your taxable income as a QCD generally will be reduced. Work with your Tax Advisor to ensure that you satisfy all the QCD requirements and that QCDs have been correctly reported on your tax return. 

³ Stanford Giving. “The Impact of the Big Beautiful Bill Act on Charitable Giving.” https://giving.stanford.edu/stories/the-impact-of-the-one-big-beautiful-bill-act-on-charitable-giving

⁴ Qualified higher education expenses generally include expenses required for the enrollment or attendance of the student at any college, university, vocational school, or other eligible postsecondary educational institution. In addition, qualified higher education expenses include tuition expenses in connection with enrollment or attendance at an elementary or secondary public, private, or religious school, i.e., kindergarten through grade 12, up to a total amount of $10,000 per year from all of the student's qualified tuition plans. The funds can also be used for continuing education fees or licensing preparation programs. Note, however, the state and local tax treatment of 529 plan accounts (including the tax treatment of distributions) may differ from the federal tax treatment. You should consult with and reply on your own independent tax advisor.

⁵ This assumes that there are no accelerated gifts made by the gift-giver to the same beneficiary during the year of the accelerated gift or the prior four years. Any accelerated gifts made to the same beneficiary in the year of the accelerated gift or in any of the four years prior to an accelerated gift is made may result in a taxable gift. Any gifts made during the year of the accelerated gift or the four years after may also result in a taxable gift. 

⁶ Morgan Stanley, “Morgan Stanley Wealth Management Pulse Survey Reveals Inflation Concerns Persist Throughout 2025,” Oct. 21, 2024, https://www.morganstanley.com/press-releases/mswm-survey-reveals-inflation-concerns-persist-throughout-2025. Note: This wave of the survey was conducted from October 3 to October 20 of 2025 among an online US sample of 961 self-directed investors, investors who fully delegate investment account management to financial professionals, and investors who utilize both.

CRC# 4958137 11/2025