By Jill Hibyan, CTFA, CFP®, and Susan John, CFP®
Beginning in 2026, the One Big Beautiful Bill Act (OBBBA) will significantly change how charitable giving affects your taxes. Understanding these updates now can help you make the most of your generosity before year-end 2025.
What’s Changing in 2026?
● Standard Deduction Givers: Starting in 2026, those taking the standard deduction may deduct up to $1,000 per person or $2,000 per couple for charitable gifts to public charities. These must be cash donations only—Donor Advised Funds (DAFs) do not qualify
● Itemizers: A new 0.5% Adjusted Gross Income (AGI) floor will apply before charitable deductions count. For example, with a $200,000 AGI, the first $1,000 of charitable giving won’t generate a deduction
● High-Income Donors: Taxpayers in the 37% bracket will see their charitable deduction limited to 35%
Example
Married Filing Jointly
Adjusted Gross Income: $755,000
Tax Bracket: 37%
Charitable Gift: $10,000
0.5% of AGI: $3,775 (not deductible)
$10,000-$3,775 = $6,225
Deduction in 2026: $2,179
($6,225 x 35% cap)
Deduction in 2025: $3,700
$10k (no floor) x 37% (no cap)
Why 2025 Is a Key Giving Year
2025 is the final year charitable deductions are available without the 0.5% AGI floor. This creates a powerful opportunity to make larger gifts and maximize your tax benefit under the current rules. Donors in higher brackets may gain even greater value by contributing this year before the 2026 reduction in the charitable deduction limit.
Smart Ways to Give
● Cash Gifts: Simple and direct contributions to qualified charities remain the most flexible way to give
● Low-Cost Basis Stock: Donating appreciated stock directly to a 501(c)(3) nonprofit or a DAF avoids capital gains taxes and provides a deduction for the full fair market value
● Qualified Charitable Distributions (QCDs): If you are 70½ or older, you can give up to $108,000 per year directly from your IRA to an eligible charity. This gift counts toward your required minimum distribution without increasing taxable income, helping reduce your AGI and possibly lowering Medicare surcharge exposure
● While DAFs and private foundations aren’t considered “eligible charities” for QCD purposes, a once-in-a-lifetime gift to a charitable gift annuity could be a viable alternative. When completed in accordance with guidelines, such gifts can achieve tax, income, and charitable objectives
● Estate & Legacy Giving: Charitable bequests and charitable remainder trusts (CRTs) can reduce taxable estates. In 2025, estates over $13.99 million per individual may face federal estate taxes—integrating philanthropy into your estate plan can help manage tax exposure
Strategic Opportunities Ahead
OBBBA encourages more intentional philanthropy. Donors may choose to “bunch” several years’ worth of giving into a single year—often using a DAF—to exceed the new 0.5% AGI floor and secure larger deductions.
Smaller contributions may yield fewer tax advantages starting in 2026, but thoughtful, well-planned gifts will continue to make a significant impact. For those taking the standard deduction, the new $1,000/$2,000 limit encourages a broader base of charitable participation—especially when paired with workplace match programs or community campaigns.
Now is the moment to revisit your giving strategy, consult your tax and financial advisors, and plan donations that both reflect your values and optimize your tax benefits.