Why Donating Appreciated Stock Might Be Smarter Than Giving Cash
If you’re planning to make charitable contributions before year-end, you’re not alone. December is a popular time for giving—and for good reason. Not only does it align with the spirit of the season, but it’s also your last opportunity to make tax-deductible donations for the 2025 tax year.
But before you reach for your checkbook or credit card, there’s another option you may want to consider: donating appreciated stock.
The Tax Benefits of Donating Stock
Donating stock that has increased in value over time can offer two major tax advantages:
You avoid paying capital gains tax on the appreciation
You get a charitable deduction for the full fair market value of the stock on the date of the donation
That means you could be giving more to charity—and keeping more of your own savings—compared to selling the stock and donating the after-tax cash.
Let’s Look at an Example:
Imagine you bought $1,000 worth of stock several years ago. Today, it’s worth $5,000.
If you sell the stock, you’ll owe capital gains tax on the $4,000 gain. At a 15% tax rate, that’s $600 in taxes—leaving you with $4,400 to donate.
If you donate the stock directly, you pay no capital gains tax, and you get a $5,000 charitable deduction.
It’s a win-win: your chosen nonprofit gets a larger gift, and you get a bigger deduction.
Is This Strategy Right for You?
Donating appreciated stock is most effective when:
You’ve held the stock for more than one year (to qualify for long-term capital gains treatment)
You itemize your deductions (rather than taking the standard deduction)
You want to support a 501(c)(3) nonprofit that accepts stock donations directly or through a donor-advised fund
If you’re not sure whether your charity can accept stock, reach out and ask—they may already have a brokerage account set up to receive gifts like this.
Timing Matters
To count for the 2025 tax year, your donation must be completed by December 31—and with stock transfers, it’s best not to wait until the last minute. Some brokerages take several days to process charitable gifts.
If you’re thinking about giving, now’s the time to talk with your CPA or advisor.
Ready to Maximize Your Impact?
At Trail CPA, we help clients explore smart, tax-efficient giving strategies that align with their financial goals and personal values. Whether you’re donating stock, cash, or considering a donor-advised fund, we’re here to make the process smooth, clear, and strategic.
Let’s finish the year with generosity—and great planning. Click here to schedule a meeting!