A donor-advised fund for bunching itemized deductions
Generally, "bunching" itemized deductions means grouping several years' worth of deductible expenses into a single tax year so that year's itemized total exceeds the standard deduction — while taking the standard deduction in the surrounding years. For example, a homeowner can pay two years of property tax in a single calendar year (once in January, once in December) to concentrate that deduction. A similar approach works with charitable giving through a donor-advised fund (DAF): a taxpayer contributes several years' worth of intended giving to the donor-advised fund in one year, and then distributes grants to their favorite charities over time from the fund.
Current Standard Deduction Amounts
Note: The 2025 amount reflects an increase enacted by the One, Big, Beautiful Bill Act (OBBBA), signed July 4, 2025, the figure was originally projected at $30,000 for joint filers before that law raised it to $31,500. Taxpayers age 65 and older receive an additional standard deduction on top of these base amounts, and for 2025–2028 the OBBBA also created a separate temporary $6,000 deduction for taxpayers 65 and older (subject to income phase-outs).
Because the standard deduction has grown substantially since the Tax Cuts and Jobs Act, it has become harder for many taxpayers to clear the threshold for itemizing in a typical year. Bunching several years of deductions into one year is one way to still capture a tax benefit from itemizing periodically.
Example: Using a Donor-Advised Fund to Bunch Deductions
Anne and John are a married couple, both under 65, with annual income of $110,000. They typically give $10,000 to charity each year and pay about $5,000 in real estate taxes each year.
Without bunching
Because the standard deduction has grown substantially since the Tax Cuts and Jobs Act, it has become harder for many taxpayers to clear the threshold for itemizing in a typical year. Bunching several years of deductions into one year is one way to still capture a tax benefit from itemizing periodically.
Example: Using a Donor-Advised Fund to Bunch Deductions
Anne and John are a married couple, both under 65, with annual income of $110,000. They typically give $10,000 to charity each year and pay about $5,000 in real estate taxes each year.
Without bunching
In every year, their $15,000 of itemizable expenses is below the standard deduction, so they take the standard deduction each year:
$29,200 + $31,500 + $32,200 = $92,900 total deductions over the three years.
With bunching
$29,200 + $31,500 + $32,200 = $92,900 total deductions over the three years.
With bunching
Anne and John prepay two years of real estate tax in 2024 and contribute three years' worth of intended charitable giving ($30,000) to a donor-advised fund in 2024.
In 2024, their $40,000 of itemized deductions exceeds that year's $29,200 standard deduction, so they itemize. In 2025 and 2026 they have little or no remaining itemizable expenses, so they simply take the standard deduction in those years.
Total deductions with bunching:
$40,000 + $31,500 + $32,200 = $103,700 over the three years.
Result: Bunching produces $103,700 − $92,900 = $10,800 of additional deductions over the three-year period compared to taking the standard deduction every year.
Over the three year period, bunching tax deduction saves them around $2,376 in federal tax savings.
In 2024, their $40,000 of itemized deductions exceeds that year's $29,200 standard deduction, so they itemize. In 2025 and 2026 they have little or no remaining itemizable expenses, so they simply take the standard deduction in those years.
Total deductions with bunching:
$40,000 + $31,500 + $32,200 = $103,700 over the three years.
Result: Bunching produces $103,700 − $92,900 = $10,800 of additional deductions over the three-year period compared to taking the standard deduction every year.
Over the three year period, bunching tax deduction saves them around $2,376 in federal tax savings.