Charitable Giving in 2026: New Tax Rules and Year-End Strategies to Consider
As the year winds down and the holiday season begins to draw near, many people will begin to think about ways in which they can give back. Giving back takes on many forms, whether it’s volunteering, donating items to those in need, or giving financial contributions to charities you are passionate about.
For many, this is a deeply personal and rewarding experience. While it’s understood that giving is done for a multitude of reasons, one of the added benefits is potential tax savings. With the passing of the One Big Beautiful Bill Act (OBBBA) in July of 2025, there are significant changes to how charitable giving affects your taxes going forward. Before finalizing your giving this year, it’s important to understand what impact the OBBBA may have on your taxes in 2026 and beyond.
Universal Charitable Deduction
The standard deduction is now $16,100 for single filers and $32,200 for married filing jointly. This higher standard deduction means many may not meet the threshold to itemize at all, previously leading to many not being able to realize the full tax benefit of their charitable contributions.
However, under OBBBA, a new universal charitable deduction allows those who claim the standard deduction to deduct up to $1,000 for single filers and $2,000 for married filing jointly for charitable contributions. The big caveat here is that these contributions need to be made via cash and given directly to the charitable organization, meaning the contributions cannot be made in the form of property or using a donor-advised fund (DAF).
Itemized Deduction Charitable Contribution Floor
Most likely the biggest change from the bill is the new floor on charitable contributions for those who itemize. Going forward, filers who itemize will only be able to deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI).
What this looks like in practice is if someone has $100,000 in AGI, they can only deduct charitable contributions that exceed $500. So in this example, if they had $2,000 in charitable contributions, they can deduct $1,500 ($2,000 minus the $500 floor). This floor is going to have the biggest impact on those with higher AGIs; someone who has an AGI of $250,000 can only deduct charitable contributions that exceed $1,250.
The 2/37ths Reduction for High Earners
For higher-income households, there is an additional hurdle. If your taxable income (before itemized deductions) exceeds the threshold for the top 37% Federal tax bracket, your cumulative itemized deductions will be reduced by a factor of 2/37ths. Essentially, this acts as a 2% surtax on those deductions, slightly reducing the hard-dollar tax benefit of giving to charity if you fall into the highest income bracket.
Strategies to Maximize Your Giving (and Minimize Tax Impact)
While these new limitations might seem frustrating, proactive planning can help you get the most out of your generosity:
Charitable Bunching with a DAF:
Because of the new 0.5% AGI floor, it may no longer make sense to give the same amount every year. Instead, you can "bunch" several years' worth of charitable contributions into a single tax year to easily clear the 0.5% floor. By contributing to a Donor-Advised Fund (DAF), you get the large upfront tax deduction in the year you contribute, but you can still disburse the grants to your favorite charities gradually over the following years.
Qualified Charitable Distributions (QCDs):
If you are over age 70½ and have an IRA, QCDs remain one of the most powerful giving tools available. Because a QCD transfers funds directly from your IRA to a charity, it is excluded from your taxable income entirely. This means it lowers your AGI directly, completely bypassing both the new 0.5% floor and the 2/37ths itemized deduction reduction, all while satisfying your Required Minimum Distributions (RMDs).
Charitable giving is often done with selfless intention, but getting the tax strategy right ensures that both you and the causes you care about benefit as much as possible. If you’re considering year-end charitable contributions, a donor-advised fund, qualified charitable distributions, or simply want to understand which approach makes the most sense for your situation, the team at Straight Path Wealth can help you plan proactively. Schedule a conversation with us to ensure your charitable giving strategy is working alongside your retirement and financial plan.
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