Sales of assets inherited by charities and donor-advised funds wouldn't be subject to capital gains taxes.

In his State of the Union address Tuesday, President Barack Obama proposed to keep a tax incentive for charitable giving by wealthy donors, while seeking to raise other tax rates on these same people.

The president for the first time stepped back from his longtime effort to reduce the value of the charitable tax deduction by carving out an exception for charities in his proposal to significantly increase capital gains taxes on the sale of inherited assets, according to an analysis by Howard Husock, a contributing writer at Forbes.

Obama proposed to close the “trust fund loophole,” whereby assets inherited as part of an estate can be sold without realizing a tax on any increase in value from the time the assets were originally purchased.

The plan would tax gains on the value of assets inherited after the owner’s death.

The president made an exception for any assets inherited by charities on which capital gains taxes might be owed. These could continue to sell inherited assets without paying tax on any increase in value.

Husock noted that big donor-advised funds, such as those operated by Vanguard, Charles Schwab and Fidelity, are especially capable of managing inherited assets. They can easily move stock holdings from brokerage or retirement accounts within their own operations to DAF accounts.

Husock said the number of individual DAF accounts and their assets had skyrocketed since 2007, thanks to which charitable donations in the U.S. held reasonably steady following the financial crisis.

Without the president’s proposed carve-out for assets inherited by DAFs, this growth would slow dramatically, damping overall charitable giving, Husock said.

In his view, Obama’s desire since entering the White House to cap the charitable deduction was based on the assumption that the government could more effectively spend the funds redirected from charities to tax coffers.

Now, Husock said, the White House has conceded that charities can deploy capital at least as well as the government.

A spokesman for United Way Worldwide, in comments to The Chronicle of Philanthropy following Obama’s address, expressed hope that by maintaining the exemption for charitable gifts, the president was signaling that he would not push for new limits on the charitable tax deduction. “That carve-out for gifts to charity is a significant indication that the administration understands tax policy can drive charitable donations,” the spokesman said.

— Check out 10 Top Trusts and Estates Trends for 2015 on ThinkAdvisor.