Bunching Tax Strategy: How to Group Deductions for Bigger Tax Savings

If your itemized deductions keep falling just short of the standard deduction, you may be leaving money on the table every single tax year. The bunching tax strategy offers a straightforward solution: instead of spreading deductible expenses evenly across multiple years, you concentrate them into a single year to maximize your tax benefits.

This article is intended for taxpayers, especially those in Columbus, Ohio, who want to maximize their tax savings through strategic planning. Understanding the bunching tax strategy can help you avoid missing out on valuable tax deductions and increase your overall tax savings.

This approach has gained significant traction since the Tax Cuts and Jobs Act roughly doubled the standard deduction in 2017. For many taxpayers in Columbus, Ohio and beyond, bunching charitable contributions, mortgage interest, and other deductible expenses into designated years can unlock thousands of dollars in additional tax savings over time.

What Is the Bunching Tax Strategy?

Bunching is a tax planning approach where you group two or more years of deductible expenses—particularly charitable donations—into a single tax year. The IRS allows taxpayers to deduct charitable contributions only if they itemize their deductions, making bunching a strategic choice for some. Bunching charitable contributions involves consolidating several years’ worth of charitable giving into a single tax year to maximize itemized deductions.

The goal is simple: exceed the standard deduction threshold in your “bunch year” so you can itemize, then take the standard deduction in the following year when your itemized deductions are minimal.

This strategy doesn’t change how much you give to charities or how much you spend on deductible expenses over the long run. It simply changes when you claim those deductions on your tax returns. By concentrating expenses strategically, many taxpayers find they can claim significantly higher total deductions across a multi-year cycle than they would by spreading everything evenly.

With the 2025 standard deduction at $15,750 for single filers and $31,500 for married couples filing jointly, and the 2026 amounts rising to $16,100 and $32,200 respectively, bunching has become more relevant than ever. These higher thresholds mean that many households whose itemized deductions once exceeded the standard deduction now fall short unless they concentrate their giving and other expenses.

This article focuses on practical, real-number examples written from the perspective of Jim Smith CPA Services in Columbus, Ohio. Whether you’re a consistent charitable giver, a homeowner with mortgage interest, or an Ohio taxpayer navigating state and local taxes, understanding how bunching works can help you make smarter decisions about your financial situation.

Key Benefits of the Bunching Tax Strategy

• Higher total deductions claimed over multiple years

• More control over when you realize tax savings

• Ability to maintain steady support for your favorite nonprofits through tools like donor advised funds

• Flexibility to align high-deduction years with high income years for maximum impact

• Simplified tax planning once you establish a predictable pattern

Why Standard vs. Itemized Deductions Matter for Bunching

Every year, taxpayers face a choice: take the standard deduction or itemize deductions on Schedule A. The standard deduction is a fixed dollar amount that reduces your taxable income without requiring you to track specific expenses. Itemized deductions, on the other hand, require documentation for each qualifying expense—charitable contributions, state and local taxes, mortgage interest, and medical expenses exceeding 7.5% of adjusted gross income.

You claim whichever option is larger. If your itemized deductions total $28,000 and the standard deduction for married couples is $31,500, you take the standard deduction. It’s that straightforward.

Here are the current standard deduction amounts:

2025 Standard Deduction:

• Single filers: $15,750

• Married couples filing jointly: $31,500

2026 Standard Deduction:

• Single filers: $16,100

• Married couples filing jointly: $32,200

The bunching tax strategy becomes most valuable for taxpayers whose normal itemized deductions land close to—but below—the standard deduction. If you’re consistently $3,000 to $5,000 short of itemizing, you’re essentially losing the tax benefit of your charitable giving and other deductible expenses every year.

Comparing Scenarios: Standard Deduction vs. Bunching

Consider this comparison over a two-year period for a married couple:

In Scenario A, the couple takes the standard deduction both years. In Scenario B, they bunch two years of charitable giving into 2026, itemize that year, and take the standard deduction the next. The difference is $5,800 in additional deductions, resulting in nearly $1,400 in tax savings at a 24% marginal tax rate.

How the Bunching Tax Strategy Works in Practice

The basic pattern of bunching is straightforward: identify a “bunch year” where you’ll concentrate multiple years worth of deductible expenses, exceed the standard deduction, and itemize. Then, in the following year or years, you take the standard deduction because your remaining itemized deductions fall below the threshold.

This alternation can happen every two years, every three years, or on longer cycles depending on your circumstances. The key is that bunching doesn’t change the total dollars you contribute to charities or spend on deductible expenses over time—it just changes when you claim those deductions.

When to Use Bunching

Bunching is especially powerful when aligned with certain life or financial events, such as:

• High income years (bonuses, stock option exercises, business sales)

• Pre-retirement years when income is at its peak

• Career transitions or extended parental leave

• First year of required minimum distributions from retirement accounts

Steps to Implement

To implement a bunching strategy, follow these steps:

1. Estimate your itemized deductions for the current year and the next one to two years.

2. Determine whether your deductions are consistently below, at, or just above the standard deduction.

3. Choose which years to bunch and which years to take the standard deduction.

4. Coordinate the timing of charitable donations, property tax payments, and other movable expenses.

5. Confirm the projected tax savings with a tax professional before executing.

Aligning with Life Events

Bunching works best when you can align high-deduction years with high-income years or other significant financial events. For example, if you expect a large bonus or are planning a Roth conversion, bunching deductions in that year can help offset the increased taxable income.

The mechanics work for any deductible expense where timing is within your control. Charitable giving is the most common focus because donors have complete flexibility over when they write checks or transfer assets. Other expenses—such as prepaying property taxes or timing elective medical procedures—can sometimes be coordinated with a bunch year, though with more constraints.

Numeric Example: Bunching Charitable Donations and Other Deductions

Let’s walk through a concrete example for a married couple filing jointly who live in Columbus, Ohio.

Profile

The couple normally gives $10,000 per year to local charities. They have $9,000 in annual mortgage interest on their home loan. They also pay approximately $10,000 in state and local taxes each year (the maximum deductible amount under the SALT cap). Their total itemized deductions in a typical year come to $29,000.

Scenario One: No Bunching (2026–2027)

In 2026, their itemized deductions total $29,000 ($10,000 charitable contributions plus $9,000 mortgage interest plus $10,000 state and local taxes). The 2026 standard deduction for married couples is $32,200. Since $29,000 is less than $32,200, they take the standard deduction.

In 2027, the same pattern repeats. Assuming the standard deduction rises slightly to approximately $32,500, they again take the standard deduction because their $29,000 in itemized deductions falls short.

Two-year total deduction: $32,200 plus $32,500 equals $64,700.

Scenario Two: Bunching Charitable Donations (2026–2027)

Instead of giving $10,000 in both years, the couple contributes $20,000 to their favorite charities in 2026 and makes no charitable contributions in 2027.

In 2026, their itemized deductions now total $39,000 ($20,000 charitable donations plus $9,000 mortgage interest plus $10,000 state and local taxes). This exceeds the $32,200 standard deduction, so they itemize and claim the full $39,000.

In 2027, with zero charitable giving, their itemized deductions drop to $19,000 ($9,000 mortgage interest plus $10,000 SALT). This is well below the standard deduction, so they take the standard deduction of approximately $32,500.

Two-year total deduction: $39,000 plus $32,500 equals $71,500.

Comparing the Scenarios

By bunching charitable donations, the couple claims $71,500 in total deductions instead of $64,700—an increase of $6,800 over two years. If the couple is in the 24% marginal tax bracket, the additional $6,800 in deductions translates to approximately $1,632 in federal tax savings. For taxpayers in higher brackets (32% or above), the savings grow proportionally.

This example uses conservative numbers. Families with higher charitable giving levels, additional deductible expenses, or longer bunching cycles (three or more years) often see even more dramatic results.

Bunching and Donor-Advised Funds (DAFs)

A donor advised fund is one of the most effective tools for executing a bunching strategy while maintaining steady support for your favorite nonprofits.

When you contribute cash or appreciated assets to a DAF, you receive an immediate tax deduction in the year of contribution—the full contribution amount, subject to adjusted gross income limits. However, you retain advisory privileges over when and to which qualified charities the funds are distributed as grants. This decouples the timing of your tax deduction from the timing of your charitable giving.

Why DAFs Work So Well with Bunching

Suppose you normally give $15,000 per year to local Columbus organizations like food banks, youth programs, and your community foundation. Instead of spreading that giving evenly, you contribute $45,000 (three years worth) to a donor advised fund in 2026, a high-income year when you received a substantial bonus.

You claim the full $45,000 charitable deduction in 2026, pushing your itemized deductions well above the standard deduction. Then, over the next three years, you recommend grants of $15,000 annually from the DAF to your favorite charities. The nonprofits receive the same steady support they would have received anyway, but you’ve concentrated the tax benefit into a single year.

Tax Advantages of Donor Advised Funds

• Immediate tax deduction: The full contribution is deductible in the year you fund the DAF

• Tax-free growth: Assets in the DAF can grow tax free, potentially increasing the amount available for future grants

• Simplified recordkeeping: You receive a single receipt from the DAF sponsoring organization rather than tracking individual donations to multiple charities

• Flexibility: You can recommend grants to qualified charities at your own pace without any deadline pressure

AGI Limitations to Keep in Mind

• Cash contributions to donor advised funds (which are public charities) are deductible up to 60% of AGI.

• Contributions of long term appreciated assets—such as stocks or mutual funds held more than one year—are limited to 30% of AGI.

• Contributions exceeding these limits can be carried forward for up to five tax years.

Columbus-Area Example

The Martinez family owns a successful business in central Ohio. In 2026, they expect unusually high income from a major contract. They decide to fund a DAF with $75,000—representing five years of their planned charitable giving. They claim the full deduction in 2026, significantly reducing their tax burden in a high-income year.

Over the following five years, they recommend $15,000 in annual grants to their favorite charities—a local children’s hospital, their church, and a Columbus community foundation. The charities receive consistent funding, and the Martinez family maximizes their community impact while optimizing their tax position.

Other Expenses You Can Coordinate with a Bunching Strategy

While bunching charitable contributions gets the most attention, several other deductible expenses can sometimes be timed strategically to amplify the benefit.

State and Local Taxes (SALT)

Ohio residents pay state income tax (up to 5.75%) plus property and local taxes. While these payments are subject to the $10,000 SALT cap, taxpayers can sometimes accelerate property tax payments from January of the following year into December of the bunch year, capturing more deductions in the target year. However, the cap limits the total benefit regardless of timing.

Property Taxes

In some municipalities, property tax payment schedules allow flexibility. If your local rules permit, you might prepay a property tax installment due in early 2027 by making the payment in December 2026, adding to your bunch-year deductions.

Medical Expenses

Medical expenses are deductible only to the extent they exceed 7.5% of AGI. If you’re planning elective procedures—dental work, vision surgery, or other out-of-pocket medical expenses—timing them to fall in a bunch year can help push your total medical costs above the 7.5% threshold.

Certain Business or Investment Expenses

Self-employed individuals or business owners sometimes have flexibility in when they pay for professional development, equipment, or contractor services. Concentrating these payments in a bunch year can add to Schedule A deductions or business expense deductions, depending on the structure.

Important Caveats:

Not all deductions can be moved easily. Prepaying obligations may strain cash flow, violate lender rules, or result in penalties. Property tax prepayment rules vary by county and state. Always verify that timing strategies are permissible and practical before execution.

Jim Smith CPA Services in Columbus can help clients map which expenses are realistically movable and coordinate them with a bunching strategy tailored to Ohio and federal tax laws.

Who Benefits Most from the Bunching Tax Strategy?

The bunching strategy delivers the greatest value for taxpayers whose regular itemized deductions consistently land just under—or only slightly above—the standard deduction. If you’re in this zone, bunching can transform “wasted” deductions into meaningful tax savings.

Common Profiles of Bunching Candidates

• Mid- to higher-income households with consistent charitable giving patterns

• Families earning $150,000 to $500,000 annually who donate $10,000 to $30,000 per year to charities

• Homeowners with mortgage interest and significant state and local taxes

• Ohio taxpayers, particularly those in the Columbus area, who approach or slightly exceed the standard deduction due to the combination of state income tax, property taxes, and mortgage interest

Life-Stage Moments When Bunching Is Especially Useful

• Pre-retirement years: When income is at its peak, concentrating deductions maximizes the benefit before shifting to potentially lower post-retirement tax rates

• Large bonus or stock sale years: Bunching deductions in the same year as a windfall reduces taxable income when marginal rates are highest

• Business-sale year: Entrepreneurs who sell a business can offset some of the gain with bunched charitable deductions

• First year of required minimum distributions: Retirees whose income jumps when RMDs begin can use bunching to soften the tax impact

Ideal Profile Checklist

• Annual itemized deductions between 80% and 110% of the standard deduction

• Consistent charitable giving of $10,000 or more per year

• Homeowner with mortgage interest

• Ohio resident paying state income tax and property taxes

• Flexibility to concentrate giving in designated years

• Interest in using a donor advised fund for multi-year grant planning

Higher-net-worth families sometimes bunch three to five years of giving at once, especially when combined with large appreciated-asset gifts or donor advised funds. For these donors, the tax savings can reach tens of thousands of dollars per bunching cycle.

Common Pitfalls, Limits, and Documentation Requirements

Bunching must follow all applicable IRS rules. Cutting corners on documentation or misunderstanding limits can result in lost deductions, penalties, or audit risk.

SALT Cap Limitations

The $10,000 cap on state and local tax deductions ($5,000 if married filing separately) applies per tax year regardless of bunching. You cannot deduct $20,000 of property taxes simply because you prepaid two years worth. This cap significantly limits the ability to bunch SALT payments.

AGI Limits on Charitable Contributions

• Cash contributions to public charities are limited to 60% of AGI.

• Appreciated property contributions (stocks, mutual funds, real estate) are generally limited to 30% of AGI.

• Contributions exceeding these limits can be carried forward for up to five tax years, but taxpayers should plan carefully to avoid unexpected carryforward situations.

Documentation Requirements

• For charitable gifts of $250 or more, you must obtain a contemporaneous written acknowledgment from the charity. This receipt must state the contribution amount, describe any goods or services received in exchange, and confirm whether the donation is tax deductible.

• Noncash donations require receipts describing the property. For gifts exceeding $500, Form 8283 (Section A) is required. For gifts exceeding $5,000, a qualified appraisal and Form 8283 (Section B) are mandatory. Gifts of closely held business interests, real estate, or other assets face heightened IRS scrutiny.

Audit Risk

A sudden spike in charitable deductions—say, $50,000 in a year when prior years showed $10,000—may trigger IRS attention. Thorough documentation and professional preparation reduce this risk, but taxpayers should be prepared to substantiate all claimed deductions.

Noncash Gift Complications

While donating appreciated stock or other assets can avoid capital gains tax and generate a fair market value deduction, these gifts require strict adherence to substantiation rules. If the IRS challenges the valuation, the deduction can be reduced or denied. Professional guidance is essential for noncash bunching strategies.

Integrating Bunching into Your Broader Tax and Financial Plan

Bunching delivers the best results when integrated into a comprehensive tax and financial strategy rather than treated as a standalone tactic.

Coordination with Other Strategies

• Roth conversions: Moving traditional IRA funds to a Roth account triggers ordinary income. Bunching deductions in the same year can offset some of that income, reducing the tax cost of the conversion.

• Stock option exercises: Executives who control the timing of option exercises can align high-income events with planned bunching years to maximize deduction value.

• Capital gains harvesting: Taxpayers planning to realize significant capital gains may bunch charitable gifts of appreciated securities in the same year, avoiding the gain while claiming the deduction.

• Retirement distribution planning: Coordinating bunching with the first year of RMDs or other retirement income events can smooth tax liability across the transition to retirement.

Multi-Year Projections

For many Columbus families and small-business owners, the optimal approach involves running detailed multi-year projections (typically three to five years forward) to test various bunching patterns. Should you bunch every two years or every three? Should you align a bunch year with a planned business sale or Roth conversion? These questions require sophisticated analysis that accounts for changing tax laws, income fluctuations, and personal goals.

Balancing Tax Optimization and Charitable Intent

Tax planning should inform—not dictate—your charitable giving. Many donors find that bunching actually enhances their philanthropic impact by making giving more tax-efficient, which can free up resources for even greater generosity over time. However, your commitment to charitable causes should remain the primary driver of when and how you support your favorite charities.

How Jim Smith CPA Services in Columbus, Ohio Can Help

Designing an effective bunching strategy requires more than understanding the concept—it demands careful analysis of your specific tax situation, income patterns, and charitable goals. Jim Smith CPA Services in Columbus, Ohio has extensive experience helping local families and business owners implement bunching strategies tailored to both Ohio state tax rules and federal requirements.

Our team can run multi-year tax projections that model different bunching schedules, estimate the dollar value of potential tax savings for 2026 and beyond, and identify the optimal timing for your situation. We assist with selecting and coordinating donor advised funds, structuring noncash gifts of appreciated securities or business interests, and ensuring all documentation meets IRS substantiation requirements.

Whether you’re approaching retirement, expecting a high-income year, or simply want to maximize the tax benefit of your charitable giving, now is the time to evaluate whether bunching makes sense for your financial situation.

Contact Jim Smith CPA Services today to schedule a consultation. We’ll help you determine whether bunching deductions could reduce your tax burden and put more resources toward the causes and communities you care about most.