The 2017 tax reform law created several tax advantages for wealthy clients’ charitable giving. Some of these advantages might soon disappear as the Biden administration tries to implement its own tax policies.

President Joe Biden’s proposed tax changes could impact high-net-worth individuals and their charitable giving—hiking the top rate on taxpayers making more than $400,000 per year, for instance, and increasing capital gains and dividend tax rates for taxpayers earning more than $1 million annually.

Both proposals, though, could spur charitable giving, in the first case by lowering taxable income, said Andrew Crowell, vice chairman of wealth management at D.A. Davidson. The proposed bump in capital gains and dividend rates “increases the value and efficiency of charitable donations for these taxpayers and would potentially induce more gifting of highly appreciated assets like shares of stock in lieu of cash,” Crowell said.

Biden also wants a 28% maximum deduction for donations by taxpayers with more than $400,000 of income. That and his proposed additional Social Security tax to income exceeding $400,000, raised from $142,800 of earned income now, “would produce a donut hole between $142,800 and $400,000 where no Social Security tax would be due,” said Robert Karon, Minneapolis-based managing director at CBIZ MHM. “This could encourage people to make donations to get under the $400,000 mark.”

A proposed 3% reduction in itemized deductions for people making more than $400,000 could be another reduction in the tax saving for donations, “but that can be absorbed by mortgage interest, investment interest and state taxes, leaving the donation partly intact,” Karon said.

One provision in the 2017 tax reform act increased the deductibility of giving cash to a public charity, said Clay Stevens, director in strategic planning at wealth management firm Aspiriant. “But I’ve had only one client actually take advantage of that increase since most don’t traditionally give more than half of their AGI away per year. Even if they do, they prefer to gift appreciated stock [more] than cash,” he said.

Contributions of appreciated stock have two powerful tax benefits.

“First, the donor takes a charitable deduction based on the fair market value of the stock. Second, the donor avoids capital gains tax on the stock’s appreciation,” said Kathleen Buchs, a CPA and director at MAI Capital Management in Cleveland. “One of the new administration’s proposals is to increase the capital gains rate from a maximum of 20% to 39.6%, so the benefit would be even higher.”

The 2017 reform eliminated the long-standing Pease Limitation on itemized deductions for wealthy taxpayers, which the Biden administration has proposed reinstating, Buchs added.

The original Coronavirus Aid, Relief, and Economic Security (CARES) Act for pandemic allowed for a limit of 100% of adjusted gross income (AGI) for gifts to public charities in 2020. That provision was extended by the new law enacted in December to 2021, said Mary Kay Foss, a CPA in Walnut Creek, Calif. “The law allows charitable folk to layer their gifts,” she said.

Charitable contributions exceeding the AGI limitations carry over for five years but can only be used in a year when a taxpayer itemizes deductions, Foss said, adding that carryovers expire after five years whether used or not. “For example, they could give stock with a 30% limitation to a donor-advised fund or public charity, use some of their charitable contribution carryovers and give cash gifts on top to get up to 100% of AGI,” she said.

In these months of great change, when do donations provide the most benefit?

“Wait until close to the end of 2021 to make donations, preferably after any tax laws have been passed. Many could be retroactive to the beginning of this year,” Karon said. “Give appreciated securities—preferably the ones with the lowest percentage tax basis and most appreciation—that hopefully will have gone up by the end of the year. If the markets look like they’re going to go down, give sooner.”