With significant tax changes on the horizon, thoughtful planning around charitable giving is becoming more important than ever. In this article, our In-Charge Senior Accountant Nicholas Signore, CPA breaks down what taxpayers need to know as new rules take effect in 2026, offering strategies to help individuals and families approach their philanthropy with greater intention and tax efficiency. Having a proactive strategy in place can make all the difference.
The tax landscape is changing in ways that make 2026 an important year to rethink charitable giving and gifting strategies. Whatever your goals may be, a deliberate multi-year plan begun in 2026 will create optionality and reduce surprises related to your charitable giving. With the enactment of the One Big Beautiful Bill Act (OBBBA), for donations made after January 1, 2026, the tax rules governing charitable contributions are changing in significant ways.
What the Changes Mean for Standard-Deduction vs. Itemizing Taxpayers
Historically, if you took the standard deduction, your charitable giving offered no federal income-tax benefit. For donations made in 2026, that changes. You’ll now be eligible for an additional deduction of $1,000 (single filer) / $2,000 (married filing joint) on cash gifts to qualified charities, even if you are not itemizing deductions. This means even small to moderate donors who take the standard deduction can get some tax benefit, providing a modest but real incentive to continue or increase charitable giving in 2026.
For itemized deduction taxpayers, the tax benefit from charitable giving becomes a bit more complicated. Beginning in 2026, taxpayers utilizing itemized deductions will see significant changes to how their charitable contributions are treated under federal tax law. Most notably, a new 0.5% of AGI “floor” applies to charitable deductions, meaning only the portion of total giving that exceeds 0.5% of a taxpayer’s adjusted gross income can be claimed as a deduction. In addition, IRC §68 imposes an overall limit on itemized deductions, including charitable contributions, for high-income taxpayers. Itemized deductions are now reduced by 2/37 of the lesser of (1) the taxpayer’s itemized deductions, or (2) the taxpayer’s taxable income that exceeds the dollar amount at which the 37% tax bracket begins. These new rules diminish the automatic value of year-over-year charitable giving for itemizers. As a result, taxpayers who itemize must now be more intentional about the timing, size, and structure of their contributions to ensure they still receive meaningful tax advantages.
Strategic Giving Strategies for 2026 and Beyond
- Bunching / Multi-Year Timing of Donations
Under the new rules, the timing of charitable contributions is more important than ever. The “bunching” strategy involves consolidating several years’ worth of donations into one significant giving year rather than spreading smaller gifts across multiple years. This approach works because, with the 0.5% floor, small annual donations may not generate any deduction. By combining contributions into a single year, you can push your total giving well above the floor, making itemizing worthwhile. Additionally, bunching allows you to concentrate deductions in years when other itemizable expenses—such as mortgage interest or state and local taxes (SALT) are also high, maximizing the benefit of itemizing when it provides the greatest advantage. We at BS&P can implement this strategy by estimating income and deduction amounts for the next two to three years and select a “bunching” year when itemizing deductions offers the biggest relative benefit. In off years, reverting to the standard deduction and taking advantage of the new $1,000/$2,000 above-the-line deduction for cash gifts previously discussed in this article may be beneficial.
- Donate Long-Term Appreciated Assets Rather Than Cash
Donating long-term appreciated assets — such as stocks, mutual funds, or other investments that you have held for more than a year — is one of the most effective ways to maximize your charitable giving. When you give these assets directly to a charity, you can deduct their full fair market value (subject to IRS limits) and avoid paying the capital gains tax you would owe if you had sold them and contributed the proceeds. This creates a double benefit: a larger charitable deduction and eliminates capital gains tax on the donated securities. To implement this strategy correctly, ensure the appreciated assets have been held for more than one year to qualify for long-term treatment, confirm that the recipient can accept non-cash gifts, and obtain a qualified appraisal for any non-marketable assets over $5,000.
- Use a Donor-Advised Fund (DAF) for Flexible, Tax-Efficient Giving
Donor-Advised Funds (DAFs) remain a powerful giving vehicle — and under the new rules may be more useful than ever. With a DAF, you put money or appreciated investments (like stocks) into the fund, get an immediate tax deduction, and then give to charities in later years. Those funds can be invested for tax-free growth, and you can recommend grants to any eligible IRS-qualified public charity. This is especially helpful under the new rules because you can make a big contribution in a year when itemizing gives you the most benefit, even if you don’t send money to charities right away. Donor-Advised Funds can effectively combine Strategies #1 and #2 by allowing taxpayers to bunch multiple years of charitable contributions into a single high-deduction year while donating long-term appreciated assets instead of cash. This approach generates an immediate deduction, eliminates capital gains tax, and allows grants to be made over time, separating the tax benefit from the timing of the gifts— a big win compared to selling investments, paying a capital gains tax, and donating that cash to charitable organizations. In short, DAFs let you separate the timing of your tax deduction from the timing of your gifts, giving you flexibility and tax savings.
Final Thoughts
At a time when charitable-giving rules are becoming more complex and less intuitive, thoughtful planning is more important than ever. The new floors, caps, and deduction limits mean that the value of your giving can vary significantly depending on how—and when—you make contributions. That is where our firm can help. We work closely with individuals and families to identify the most advantageous and efficient ways to provide you with the maximum benefit while meeting your charitable goals. Let us help you build a charitable and gifting strategy that aligns your generosity with smart tax planning. Contact us to learn more.
