July is a great month to consider plans for charitable gifts in 2025. These gifts could include an IRA charitable rollover, a gift of cash or a gift of appreciated stock or land.
If the donor purchased stock seven years ago for $10 per share and it is now worth $50 per share, the donor would pay capital gains tax on $40 if he or she sold the stock. However, by giving the stock to charity, the donor may receive a deduction for the $50 in value and bypass the tax on the $40 of potential gain. Because the donor is receiving both the deduction and capital gain bypass benefits, this type of gift is permitted to 30% of adjusted gross income (AGI). Once again, if the value is in excess of this limit, it may be carried forward for an additional five years.
For example, Mary Smith has adjusted gross income of $100,000 this year and makes a gift of appreciated stock with a fair market value of $40,000. She is able to deduct $30,000 and carry forward $10,000 and deduct that amount over the following five years.
Editor’s Note: Summer is a good time to make plans and consider the options for gifts in 2025.
On July 1, the Senate was deadlocked 50 to 50 on the One Big Beautiful Bill Act. However, Vice President JD Vance voted in favor of the bill, and it passed by a vote of 51 to 50. The bill then moved to the House of Representatives and passed 218-214 on July 3, 2025.
There are multiple tax and spending provisions in the 887-page bill. These will impact all Americans in the coming years.
Editor's Note: This information is offered as a service to our readers.
There is a widespread diversity of opinion on the One Big Beautiful Bill Act. Two organizations that have commented on the bill are the American Institute of CPAs (AICPA) and the Committee for a Responsible Federal Budget (CRFB). As is the case with many organizations in America, they have strongly different opinions on the bill.
The AICPA is strongly supportive of the bill because of the Senate modifications. The AICPA claims the Senate provisions that allow pass-through entities (PTEs) to deduct state and local taxes are necessary for them to have a comparable tax position with corporations. The AICPA strongly advocated that the bill be modified to allow the pass-through entities to have full deductions for state and local taxes.
The AICPA published a letter and stated, "We appreciate the challenges that come with drafting a budget reconciliation bill that permanently extends tax provisions, enhances tax administrability and balances the interests of individual taxpayers and business taxpayers."
There are multiple provisions that were approved in the Senate bill. The Senate bill expands on the use of section 529 accounts to cover expenditures for post-secondary credentials. It also makes the section 174 deduction for research and development expenditures, along with the 100% bonus depreciation provision, permanent.
In addition, the bill permanently extends the section 199A qualified business income deduction, with an expanded phase-out range for specified service trades or businesses.
The AICPA expressed appreciation to the Senate for "significant improvements" in the bill. The AICPA President & CEO Mark Koziel, CPA, CGMA, stated, "We are grateful to members of Congress who supported millions of businesses’ ability to retain this critical deduction."
The Committee for a Responsible Federal Budget had a strongly negative response to the One Big Beautiful Bill Act. It noted that the bill adds $4 trillion to the national debt through 2034.
The House bill instructions required $2 trillion of spending cuts in order to pass the $4.5 trillion in tax cuts. However, the Senate Bill was "$600 billion or more short" of the spending cuts.
Maya MacGuineas is President of the CRFB. She noted, "The level of blatant disregard we just witnessed for our nation's fiscal condition and budget process is a failure of responsible governing. The Senate bill would add $600 billion to the deficit in 2027 alone, push deficits above 7% of GDP, drive debt to new record highs, and accelerate the insolvency of Social Security and Medicare."
In the view of the CRFB, the bill fails the test of fiscal responsibility.
Editor's Note: With 435 members of the House of Representatives, 100 Senators and the White House, compromises are inevitable with any large piece of legislation. The One Big Beautiful Bill Act was no exception, reflecting the legislative process intentionally established during the Constitutional Convention of 1789. As a result, various organizations will express differing opinions on the bill and its contents.
The IRS has announced the Applicable Federal Rate (AFR) for July of 2025. The AFR under Sec. 7520 for the month of July is 5.0%. The rates for June of 5.0% or May of 5.0% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2025, pooled income funds in existence less than three tax years must use a 4.0% deemed rate of return. Charitable gift receipts should state, “No goods or services were provided in exchange for this gift and the nonprofit has exclusive legal control over the gift property.”
National Taxpayer Advocate Calls the Tax Season a Measured Success
Energy Credits Available for 2025