Wealth Planning Insights
Charitable Giving Rules Are Changing in 2026
Keith Fenstad, CFP®, September 2025
Tanglewood clients are an incredibly charitable group. I can honestly admit I have grown to be a more cheerful and generous giver after working with clients over the past two decades.
Our conversations with clients encompass not only the client’s overall purpose and goals for giving but the detailed strategies to accomplish them in a financially smart way within an ever-changing tax environment.
In July, we discussed some of various tax law changes that came about due to the One Big Beautiful Bill Act (OBBBA). This article focuses on those changes directly related to charitable giving. There are a number of new rules taking effect this year and next year that may be meaningful as we approach planning for the end of the year and into 2026.
A Deduction for Non-Itemizers
This provision was first introduced in 2020 and 2021 under the CARES Act, but starting in 2026, taxpayers who do not itemize will be able to claim a universal “above-the-line” charitable deduction.
$1,000 for single filers
$2,000 for married couples filing jointly
This deduction applies only to cash gifts made directly to qualified charities (not to donor-advised funds or private foundations). It creates a meaningful incentive for more households to give, even if they take the standard deduction.
Itemizers Face a 0.5% AGI Floor
Starting in 2026, itemized charitable deductions must exceed 0.5% of Adjusted Gross Income (AGI) before a deduction can be applied.
Example: A client with $300,000 of AGI, the first $1,500 of their charitable giving will not count toward their deduction.
This may make “bunching” donations — grouping multiple years’ gifts into one tax year — a more valuable strategy.
Cap on Tax Savings for High Earners
Starting in 2026, taxpayers in the top 37% bracket will see the value of their itemized deductions (including charitable contributions) capped at 35%, reducing the tax benefit on each deductible dollar.
QCDs Retain their Benefits
Qualified Charitable Distributions (QCDs) from IRAs remain untouched and become a more valuable strategy moving forward. Taxpayers age 70½ and older can still distribute up to $108,000 annually per person (2025) directly from an IRA to charity. These gifts avoid AGI limits and provide a very tax efficient way to give. Especially for those clients subject to Required Minimum Distributions. Since the QCD is excluded from AGI, it is beneficial all the way to the 37% tax bracket.
Planning Opportunities
2025 Advantage: Current rules allow unrestricted deductions, with no AGI floor or cap on deduction value (with the exception of the % AGI limitations on gifts of appreciated assets.) That makes 2025 an attractive year for clients to “front-load” larger gifts or fund donor-advised accounts to maximize itemized deductions.
2026 & Beyond: Non-itemizers will gain a new incentive, while higher-income donors face reduced tax benefits on gifts. Strategies like QCDs, donor advised funds, and bunching donations will play a bigger role.
| Donor Type | 2025 Advantage | 2026 Rule Change | Planning Tip |
|---|---|---|---|
| Non-Itemizers | No charitable deduction available. | $1,000–$2,000 above-the-line deduction for all filers | Delay planned donation to Jan 2026 |
| Itemizing, Mid-Income | Full charitable deduction without floor. | 0.5% of AGI floor takes effect. | Bunch donations in 2025 |
| Itemizing, High-Income | Full charitable deduction at 37% tax benefit without floor | 0.5% AGI Floor + 35% cap on deduction value | Accelerate 2025 giving, use QCDs, Donor Advised Funds. |
The changes expand charitable giving tax breaks for many households while limiting benefits for others. If charitable giving is part of your annual tax planning, 2025 may be the right year to act on larger gifts before the new limits take effect.
As always, reach out to your Tanglewood Wealth Advisor to discuss how to approach charitable giving strategies specific to your situation.