The Retirement Bunching Strategy More Seniors Should Know, According to CPAs
Retirees may have a variety of tax-deductible expenses, from charitable contributions to state and local taxes and certain medical costs.
But when those expenses don’t add up to more than the standard deduction, itemizing may not provide any additional tax benefit. That’s where a strategy known as “bunching” can come in.
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MoneyLion spoke with certified public accountants (CPAs) to explain how this retirement strategy works.
What Is the Retirement Bunching Strategy?
Instead of spreading deductible expenses evenly across several years, according to Anthony Guerriero, a certified public accountant (CPA) and managing partner at Manhattan Miami Real Estate, a retiree can deliberately concentrate several years of deductible spending, usually charitable gifts, into one tax year so that year's itemized deductions clear the standard deduction.
“In the off years, you take the standard deduction,” he said.
However, Tony Jhang, a CPA at MyFreeTaxAmerica, clarified, “Bunching does not create a tax deduction. It merely changes the tax year in which the taxpayer is allowed to take the deduction.”
It’s essentially a timing strategy.
Why Bunching May Be Especially Useful for Retirees
The strategy can be particularly useful to retirees who have paid off their mortgages and therefore no longer have mortgage interest helping push their itemized deductions above the standard deduction, Guerriero pointed out.
For 2026, the standard deduction is $32,200 for married couples filing jointly. Married taxpayers age 65 or older can receive an additional standard deduction of $1,650 each, putting it at $35,500 when both spouses qualify, per IRS rules.
Non-itemizers also can take advantage of a relatively new tax break for charitable giving this year. Married couples who take the standard deduction can deduct up to $2,000 in qualifying cash charitable contributions. That makes charitable giving a slightly better deal for non-itemizers, though the benefit has a cap and contributions to donor-advised funds don’t qualify.
How Bunching Could Work in Real Life
Guerriero laid out how a scenario in which this strategy could work: A retired couple gives $12,000 to charity annually and has $10,000 in deductible state and local taxes. That gives them $22,000 of potential itemized deductions each year, below their $35,500 standard deduction.
Instead, they could contribute three years’ worth of giving, so $36,000, to a donor-advised fund in 2026. The fund could then distribute $12,000 to their chosen charities each year, allowing the couple to maintain their usual giving schedule.
It’s worth considering that the federal state and local tax (SALT) deduction limit is now considerably higher than the old $10,000 cap, currently $40,000, but not everyone will have that much to pay, so Guerriero’s hypothetical could still work.
Consider QCDs Before Automatically Bunching Charitable Gifts
Bunching should not be the default strategy for every charitable retiree.
“Once you're 70 and a half, a qualified charitable distribution (QCD) paid from the IRA straight to the charity is often better than bunching,” Guerriero said. A QCD sends money directly from an IRA to an eligible charity and can count toward a required minimum distribution (RMD), which can also help with Social Security taxation and Medicare premiums.”
Who Is Most Likely To Benefit From Bunching?
It’s important to remember that bunching is a targeted strategy. Jhang doesn’t think every retiree will benefit from this approach. Though he said, “It is useful for retirees who have charitable inclination and are, for example, close to the standard-deduction threshold and have control over the timing of charitable gifts.”
Also Guerriero pointed out that once money goes into a donor-advised fund it can't be taken back, “so only bunch money you're sure you'll give.”
Making a Final Decision
Before moving several years of charitable giving into a single tax year, retirees should run the numbers with a tax professional and compare bunching with alternatives such as QCDs. The goal is to make sure the timing of deductions works with the retiree’s broader tax and income plan.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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