If you give to charity, the tax rules on those gifts are different in 2026. The One Big Beautiful Bill Act, signed last summer, rewrote how donations get deducted starting this tax year. Some people come out ahead. Many of the business owners and professionals I work with will get a little less tax benefit from the same gift unless they plan for it.
We're heading into fall, which is when I sit down with clients to talk about year-end decisions. Charitable giving is on that list every year. This year it deserves more attention than usual.
If you take the standard deduction
This one is good news. Before 2026, if you didn't itemize, your donations didn't help you at tax time at all. Now you can deduct up to $1,000 in cash gifts to charity, or $2,000 if you're married filing jointly, on top of your standard deduction.
There are a few rules to know. It has to be cash, meaning checks, card payments, online gifts, or payroll giving. Gifts to donor-advised funds and private foundations don't count toward this deduction. Anything over the limit doesn't carry forward to next year. And the usual paperwork still applies, so get a written acknowledgment for any gift of $250 or more.
If you itemize
Two changes matter here.
The first is a new floor. You can now only deduct the part of your giving that's above 0.5% of your adjusted gross income. If your AGI is $400,000, the first $2,000 you give isn't deductible. Give $10,000 and you deduct $8,000. For generous givers this is a small adjustment. For people whose giving is modest compared to their income, it can wipe out most of the deduction.
The second change hits the top bracket. If you're in the 37% bracket, the tax value of your itemized deductions is now capped at 35%. A $10,000 gift that used to save you $3,700 in federal tax now saves about $3,500. That cap applies to all your itemized deductions, so it reaches further than just charity.
One piece of good news for itemizers: the rule letting you deduct cash gifts to public charities up to 60% of your AGI is now permanent. It had been set to drop back to 50%. And if you give more than you can deduct in a year, you can still carry the excess forward for five years.
What I'm talking through with clients
The first idea is bunching. Instead of giving the same amount every year, you combine two or three years of giving into one year. That gets you well past the 0.5% floor in the big year, and you take the standard deduction plus the new cash deduction in the off years. A donor-advised fund makes this easy. You put the money in during the big year, take the deduction then, and send grants to your charities on your normal schedule over the next few years.
The second idea is giving appreciated investments instead of cash. If you've held a stock or fund for more than a year and it's grown, you can give it directly to a charity or donor-advised fund. You generally avoid the capital gains tax you'd owe if you sold it, and you can still deduct the full market value if you itemize. The new floor and cap still apply to that deduction, but skipping the capital gains tax often matters more.
The third idea is for anyone 70½ or older with an IRA. A qualified charitable distribution sends money straight from your IRA to a charity. It never shows up in your taxable income, and it can count toward your required minimum distribution. Because it lowers your income directly instead of working as a deduction, the new floor and the 35% cap don't touch it. The limit for 2026 is $111,000 per person. Keeping that money out of your AGI can also help with Medicare premium surcharges. For a lot of retirees who give, this may be a valuable charitable giving tool.
Why the timing matters
These rules are permanent, so this isn't a one-year adjustment. The way you gave the last few years may not be the best way to give from here on. The right answer depends on your income, whether you itemize, what you own, and your age. A dental practice owner in the top bracket with a big capital gain on the books needs a different plan than a retired couple drawing RMDs.
What doesn't change is why you give. My job is to make sure the causes you care about get as much as possible and your tax bill stays as low as the rules allow. Most of the good moves have to happen before December 31, and some, like moving appreciated stock or setting up a donor-advised fund, take a few weeks to complete.
If you give regularly and want to see how this year's changes affect you, reach out and we'll set up a short call.
Brian Swilling NaviPath Wealth 704.248.6090 | Brian@navipathwealth.com
This content is for informational purposes only and is not tax or legal advice. Please consult your tax professional about your specific situation. Advisory services offered by Investment Advisory Representatives of RFG Advisory, a registered investment advisor. NaviPath Wealth and RFG Advisory are unaffiliated entities.