Americans are well known for their generosity. In fact, in 2024, charitable contributions across the country totaled an extraordinary $592.50 billion, according to Giving USA. If giving is already part of your financial plan, now is an ideal time to revisit your approach. Beginning January 1, 2026, the One Big Beautiful Bill Act (OBBBA) will make permanent changes to the tax treatment of charitable giving, with the biggest impact on those who itemize deductions.

By understanding the upcoming rules and making thoughtful adjustments before the end of the year, you may be able to capture today’s more favorable tax advantages while they remain in effect.

What’s Ahead in 2026: Updates to Charitable Deduction Rules

Starting in 2026, the One Big Beautiful Bill Act (OBBBA) introduces permanent revisions to how charitable contributions are treated for tax purposes. Below is an overview of the key changes you’ll want to keep in mind:

Above-the-Line Deductions for Standard Deduction Filers

Beginning in 2026, taxpayers who don’t itemize will still be able to claim a charitable deduction. The allowance is:

• Up to $2,000 for couples filing jointly
• Up to $1,000 for individuals

This deduction applies only to cash donations made directly to eligible public charities. It does not extend to gifts contributed through donor-advised funds (DAFs) or to non-cash contributions.

Reduced Charitable Deduction for Itemizers

Starting in 2026, those who itemize deductions will see a small but permanent reduction in the charitable deduction they can claim. The new rule trims 0.5% of adjusted gross income (AGI) from the total amount deductible, lowering the tax benefit of giving.

For instance, with an AGI of $400,000, the 0.5% reduction equals $2,000. Therefore, if you contribute $20,000 to charity, only $18,000 would count as a deductible expense under the updated rules.

Deduction Limits for High-Income Taxpayers

Beginning in 2026, individuals in the highest tax bracket will see a reduced benefit from charitable giving. The maximum value of deductions will be capped at 35%, compared to the current 37%. This change comes in addition to the new rule that trims 0.5% of adjusted gross income (AGI) from the amount eligible for deduction. For example, if your AGI is $1 million in 2026 and you donate $50,000:

• The 0.5% AGI reduction removes $5,000, leaving $45,000 as the deductible portion.
• Applying the 35% limit, your tax savings would be $15,750.

Under today’s rules, the full $50,000 would qualify at 37%, resulting in $18,500 of tax savings. That’s a difference of $2,750, illustrating why it may be wise to plan charitable contributions before these new rules take effect.

What Stays the Same

Qualified charitable distributions (QCDs) from IRAs will remain one of the most tax-efficient ways for retirees to give. These gifts are still fully deductible, excluded from adjusted gross income (AGI), and untouched by the upcoming law changes.

5 Charitable Giving Moves to Consider Before 2026

While the OBBBA will soon bring lasting changes to charitable tax rules, there’s still time to take advantage of the current, more favorable framework. Here are a few strategies to consider putting in place before year-end:

#1: Accelerate Giving into 2025

If you anticipate making large charitable gifts in the coming years, it may be wise to move some of that giving into 2025. Doing so allows you to lock in today’s more favorable deduction rules before they change.

This approach can be particularly advantageous if:

• You plan to itemize deductions in 2025.
• Your income or deductions are likely to be lower in future years.
• You’re in the top tax bracket and want to benefit from the current 37% deduction rate.

Not sure whether you’ll itemize this year? Running a 2025 tax projection with your CPA or financial planner can provide clarity.

#2: Bunch Contributions to Boost Tax Efficiency

If you typically spread out your charitable gifts, consider grouping several years’ worth into 2025. By “bunching” donations, you may push your total contributions above the standard deduction limit, making itemizing worthwhile and increasing your overall tax savings.

For instance, rather than donating $10,000 in both 2025 and 2026, you could give $20,000 in 2025, itemize that year, and then take the standard deduction the following year. This way, you maximize deductions without altering the total amount you give.

Using a donor-advised fund can make this strategy even more effective. You claim the full deduction in 2025 while retaining flexibility to distribute funds to charities over time.

#3: Give Non-Cash Assets Before the Rules Change

Under the OBBBA and its new charitable giving rules, non-itemizers won’t be able to claim an above-the-line deduction for non-cash contributions such as clothing, household goods, or appreciated securities. In other words, unless you itemize, these gifts won’t provide a tax benefit.

If you currently itemize but expect to take the standard deduction in future years, consider making your non-cash donations in 2025 so you can still deduct their value under the existing rules.

Examples of non-cash contributions to consider this year include:

• Gently used clothing and household items
• Vehicles
• Appreciated stocks or other securities
• Collectibles or other tangible property

Remember to keep proper records of your donations, particularly for items worth more than $500.

#4: Take Advantage of QCDs at Age 70½+

For retirees, qualified charitable distributions (QCDs) remain one of the most tax-efficient ways to give. If you’re 70½ or older, you can transfer up to $108,000 in 2025 (inflation-adjusted) directly from your traditional IRA to a qualified charity, and the amount counts toward your required minimum distribution (RMD).

QCDs offer several advantages:

• They don’t increase your AGI, which may help you avoid higher Medicare premiums and other income-related taxes.
• They are unaffected by the OBBBA, meaning the tax benefits stay intact beyond 2025.
• You can donate to multiple charities in one year while keeping your tax reporting simple.

Important: the transfer must go straight from your IRA custodian to the charity. If you withdraw the funds first, the amount will be treated as taxable income and won’t qualify as a QCD.

#5: Consider a Donor-Advised Fund (DAF)

A donor-advised fund lets you make a large, deductible gift now while giving you the flexibility to distribute the money to charities gradually. This can be an effective way to bunch donations or lock in today’s more favorable deduction rules while still supporting causes over time.

With a DAF, you can:

• Claim the deduction in the year you contribute.
• Decide later when and how to recommend grants to charities.
• Contribute appreciated assets, such as stock, to avoid capital gains taxes while still receiving the full deduction (if you itemize).

One key note: starting in 2026, DAF contributions won’t qualify for the new above-the-line deduction available to non-itemizers. If you expect to use the standard deduction in future years, opening or funding a DAF before the rules change can help maximize your tax benefits.

Maximizing Your Charitable Giving Ahead of OBBBA Changes

The OBBBA changes don’t require a complete overhaul of your financial plan, but they do create an opportunity to be more deliberate with your charitable giving. If giving back is part of your vision, taking action before year-end can help you amplify your impact while capturing today’s more favorable tax benefits.

You don’t have to sort through these changes on your own. Partnering with an experienced financial advisor gives you the guidance to evaluate your options, craft strategies that fit your circumstances, and ensure your generosity aligns with both your values and your long-term goals. Contact us to learn more.