Key Takeaways
- New charitable giving rules taking effect in 2026 under the “One Big Beautiful Bill” have introduced stricter deduction thresholds and limits, making strategic planning more important than ever.
- Donor-advised funds and qualified charitable distributions provide strategic alternatives that can help donors exceed new minimum thresholds, bunch contributions, and maximize tax benefits while maintaining meaningful giving practices.
- New charitable deduction thresholds beginning in 2026 require donors to give more than 0.5% of AGI to claim any deduction, while limiting the tax benefit to the 35% bracket rate.
If you’ve always written checks to your favorite causes and felt good about the tax deduction, 2026 might feel different. The “One Big Beautiful Bill” (OBBB) is bringing significant changes to the charitable giving landscape that will impact your 2026 giving and the taxes you’ll file in 2027.
Your 2025 giving deadline is December 31, 2025. Donations made before that date follow the current rules. Starting January 1, 2026, the new OBBB rules apply.
The new tax laws have tightened the limits on charitable deductions and altered some of the rules governing charitable giving. Rather than viewing this as a roadblock, consider it an opportunity to explore giving strategies you may have never considered before.
You may find ways to give more effectively while still receiving tax benefits, and in some cases, create a more meaningful giving experience in the process.
Let me share a few approaches that might resonate with you.
What’s Changing With OBBB
Before exploring different approaches to giving, it’s helpful to understand what’s changing under the OBBB and how those updates might affect charitable deductions.
Here are some key charitable deduction changes taking place in 2026 that you should be aware of:
- New minimum threshold: You must donate more than 0.5% of your AGI to claim any charitable deduction. This is the new eligibility floor. Anything under that threshold cannot be deducted.
- Cash contribution limit: The cash contribution to public charities has been permanently capped at 60% of your AGI. This is the limit for how much you can deduct in a single year.
- Tax benefit ceiling: Charitable deductions are now capped at the 35% tax bracket rate, meaning high earners in the 37% bracket only get credit as if they’re in the 35% bracket.
- Estate and gift tax exemptions: On a more positive note, the estate and gift tax exclusion has been permanently raised to $15 million per individual ($30 million for married couples) beginning in 2026, indexed for inflation.
This is a significant increase from the $13.99 million exemption in 2025, which would have been cut in half under the prior law. For families considering legacy and charitable giving as part of their estate planning, this expanded exemption presents new planning opportunities.
These updates may change how deductions are calculated, but they don’t change the joy of giving.
Donor-Advised Fund
A donor-advised fund (DAF) can simplify giving while maintaining a personal connection to the causes you support. Instead of making multiple donations throughout the year and keeping track of the paperwork, a DAF allows you to make a single contribution into a giving account. Then, over time, you recommend grants to eligible charities whenever you feel inspired.
A DAF is becoming particularly appealing under the new tax law for a couple of reasons. First, you might bunch several years’ worth of giving into one year to exceed both the new minimum threshold and the higher standard deduction, then distribute the funds to charities gradually.
Second, if you’re dealing with appreciated stock or other investments, you can donate those assets directly to your donor-advised fund, avoiding capital gains tax while potentially receiving a deduction for the full fair market value.
I appreciate that DAFs can transform giving from a year-end scramble into a more intentional practice.
Qualified Charitable Distributions
For those in retirement or approaching it, qualified charitable distributions (QCDs) may be a meaningful way to support causes while potentially reducing taxes.
Once someone reaches age 70½, they may direct up to a certain amount ($108,000 for tax year 2025, indexed for inflation in 2026) each year from an IRA straight to a qualified charity. The money never comes to the individual first, so it doesn’t count as taxable income. When required minimum distributions (RMDs) are in play, QCDs can sometimes help satisfy them.
With the new minimum threshold and the tax benefit ceiling limiting deductions for high earners, a QCD provides tax benefits that aren’t subject to these restrictions.
Beyond the tax advantages, there’s something satisfying about this approach for clients in their 70s and beyond who may not need their full RMD for living expenses. Rather than taking a distribution, paying taxes on it, and then writing a check to charity, you streamline the process and maximize the impact of your gift.
Charitable Deduction Limits
Beyond the cash contribution limit of 60% of AGI mentioned earlier, there are other boundaries worth understanding when it comes to charitable giving strategy.
For donations of appreciated assets like stock or real estate to public charities, the limit is 30% of AGI. If you give to private foundations, the limits are even lower: 30% for cash and 20% for appreciated assets.
These limits might sound generous until you consider someone going through a significant transition. Perhaps you’ve sold a business, received an inheritance, or had an unusually high-income year. Suddenly, you’re facing a larger tax bill and want to support causes that matter to you, but the deduction limits may prevent you from offsetting as much income as you’d hoped in a single year.
This is where strategic planning becomes valuable. Excess contributions can be carried forward for up to five years, so timing matters. You might also consider combining strategies such as using a donor-advised fund to make a significant contribution in a high-income year, then spreading out the grants over time.
Or if you’re in the position to do so, bunching several years of giving into alternating years to exceed both the minimum threshold and the standard deduction threshold in those years.
What’s important to remember is that these limits exist on top of an already complex tax code. The interplay between the new minimum threshold, the contribution limits, and the tax benefit ceiling means that planning around charitable giving has become more nuanced than simply writing a check and claiming a deduction.
Moving Forward With Purpose
The tax landscape around charitable giving has certainly shifted, but at its core, giving has always been about more than tax deductions. It’s about supporting work that matters to you, creating change you want to see, and often, living according to your values.
The strategies I’ve shared are simply tools. They work best when they’re part of a broader conversation about what you want your money to do in the world and how that fits into your overall financial life.
If you’re feeling uncertain about how the new tax laws affect your giving, or if you’re curious whether there are more effective ways to support the causes you care about, let’s talk. A conversation about charitable giving often leads to deeper discussions about values, legacy, and what feels meaningful at this stage of life.
Schedule a client review meeting, and we’ll explore what makes sense for your specific situation.
Frequently Asked Questions (FAQs)
Q: Are donor-advised funds still a good option under the new tax laws?
A: Yes. Donor-advised funds remain one of the most flexible giving strategies. They allow you to “bunch” multiple years of charitable contributions into one year to exceed the minimum deduction threshold, while maintaining control over when and how the funds are distributed to charities.
Q: If I contribute to a donor-advised fund in 2025, will my deduction be subject to the new 0.5% AGI floor?
A: No, contributions made in 2025 are not subject to the 0.5% AGI floor. This makes 2025 a strategic year to fund your DAF, as you can take the full deduction under current rules and then distribute grants to charities over time
Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.
