Charitable giving has long been a cornerstone of tax planning. Before the 2025 year closes, we wanted to make you aware of several significant changes to the charitable giving tax rules that will take effect in 2026, reshaping the landscape for donors. Understanding these changes is crucial for maximizing the impact of your philanthropy and your tax savings.
Key Changes Coming in 2026 for individuals
The most notable change for individuals is the introduction of a new 0.5% adjusted gross income (AGI) floor for itemized charitable deductions. Starting in 2026, individuals who itemize will only be able to deduct charitable contributions that exceed 0.5% of their AGI. For example, if your AGI is $200,000, your charitable contributionsfloor will be $1,000. If you contribute $2,500 to qualified charities during 2026, only $1,500 will be deductible. However, if your charitable contributions are only $900 during 2026, there will be no charitable deduction write off for those who itemize.
For those who do not itemize, there’s good news though: a new above-the-line deduction for cash contributions to qualified public charities was created. This will allow taxpayers who do not itemize to deduct up to $1,000 for single filers and $2,000 for joint filers. This deduction excludes gifts to donor-advised funds though.
Key Changes Coming in 2026 for corporations
Similar to the AGI floor for individuals, corporations will be subject to a new 1% of taxable income floor for charitable deductions. Starting in 2026, corporations will only be able to deduct charitable contributions that exceed 1% of their taxable income. For example, if your taxable income is $200,000, your charitable contributions floor willbe $2,000. If you contribute $5,000 to qualified charities during 2026, only $3,000 will be deductible. However, if your charitable contributions are only $1,500 during 2026, there will be no charitable deduction write off.
Tax Planning Strategies for 2026 and Beyond
To maximize the tax benefits of charitable giving under the new rules, consider these strategies:
• Accelerate planned 2026 giving. If you plan to make a donation in 2026, especially during the first quarter, and have the funds available now, consider making the contribution before year-end in 2025 instead to preventthe donation from being subject to the new floor limitations.
• Bunching Contributions: Combine several years’ worth of charitable gifts into a single year to ensure you exceed the 0.5% AGI / 1% of taxable income floor and the standard deduction (for individuals).
• Donating Appreciated Assets: Donations of long-term appreciated securities can provide a deduction for the fair market value of the donated stock and avoid capital gains tax.
• Qualified Charitable Distributions (QCDs): If you are over 70½, consider making direct transfers from your IRA to charity, which can satisfy required minimum distributions and reduce taxable income.
• Use of Charitable Trusts: Charitable remainder trusts can provide income and estate planning benefits while supporting your favorite causes.
As 2026 approaches, reviewing your charitable giving strategy with these new rules in mind will help ensure your generosity continues to make a difference—for both your chosen charities and your tax situation.
Our advisors are happy to help answer any questions you may have or to discuss this in more detail. Contact us today!