Every week, Allworth Financial’s Steve Hruby, CFP®, and Bob Sponseller, ChFC®, answer your questions. If you, a friend, or someone in your family has a money issue or problem, feel free to send those questions to [email protected].
L.T. in Warren County: I like to give back, so I’m starting to think about my giving as we get toward the end of the year. Did the recent tax law change anything?
Answer: Absolutely, and it could be a game-changer for folks at both ends of the giving spectrum.
Back in July, Congress passed the “One Big Beautiful Bill Act.” And tucked inside this bill are some significant updates that make charitable giving more tax-friendly than it’s been in years.
For higher-income households (especially those eyeing tax planning optimization or legacy giving), the bill raises both the adjusted gross income (AGI) threshold for deductible gifts and the overall limit on itemized charitable deductions.
Translation? If you’ve had a high-earning year or you’re looking to donate appreciated assets like stock or real estate, this could be an ideal time to lean into options like Donor-Advised Funds (DAFs) or Charitable Remainder Trusts (CRTs). These tools let you donate now, deduct now and distribute gifts over time. If you’re looking to optimize your taxes or shape a charitable legacy, it’s a strong planning window.
Also, starting in 2026, a brand-new above-the-line deduction allows non-itemizers to deduct up to $1,000 in charitable gifts ($2,000 if married filing jointly). This is a big deal. Ever since the standard deduction was raised in 2017, about 90% of taxpayers haven’t been able to deduct their donations according to Fidelity. This new rule brings that benefit back for the majority of households. You may remember a version of this during the pandemic – and nearly 90 million people took advantage of it.
Here’s the Allworth Advice: Whether you’re donating a thousand dollars or a hundred thousand, this new law provides a great opportunity to revisit your giving strategy. But just like any sort of new legislation (especially tax legislation), the devil is in the details. Be sure to reach out to a trusted fiduciary financial advisor or tax professional if you have additional questions.
Annie from Newport: Should I pay off my mortgage early or invest the difference? I keep going back and forth, so hoping to get your opinion.
Answer: This is one of those timeless money questions. And while the answer depends on your priorities, here’s how to break it down.
First, compare your mortgage rate to your expected investment return. For example, if your rate is under 4% and you can reasonably expect 6-7% long-term returns from a diversified portfolio, investing may make more financial sense. But if the idea of being debt-free gives you more peace than chasing returns, that’s valid, too.
Also consider taxes: If you itemize deductions, mortgage interest may still be giving you a break. And don’t forget liquidity – once you pay down the loan, that money is locked in the house.
The Allworth Advice is that you need to run the numbers and be truthful with yourself about what will help you sleep better at night. A hybrid approach could hit the sweet spot: Keep investing for long-term growth, but make occasional lump-sum payments to your mortgage. That way, you’re building wealth and chipping away at debt without committing all your eggs to one basket.
Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Retirement planning services offered through Allworth Financial a SEC Registered Investment Advisor. Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Visit allworthfinancial.com or call (513) 469-7500.
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