Maximizing Your Charitable Deductions Before the 2026 Tax Law Changes

Americans have a long-standing reputation for generosity. In 2024 alone, charitable giving in the U.S. reached an impressive $592.50 billion, according to Giving USA. If charitable donations are part of your financial plan, now is a good time to take a fresh look at your strategy. Starting January 1, 2026, the One Big Beautiful Bill Act (OBBBA) will bring permanent changes to the tax rules around charitable giving, especially for those who itemize deductions.

By getting familiar with what’s ahead and making a few smart moves before year-end, you may be able to take advantage of the current, more favorable tax benefits while they’re still available.

What’s Changing in 2026: Key Charitable Deduction Revisions

Under the OBBBA, new rules will govern the tax treatment of charitable donations beginning in 2026. Here’s a breakdown of what to expect:

Above-the-Line Deductions for Non-Itemizers

Taxpayers who take the standard deduction (in other words, don’t itemize) will be able to deduct up to:

• $2,000 for married couples filing jointly
• $1,000 for single filers

This new above-the-line deduction applies only to cash gifts to qualified public charities, not to contributions to donor-advised funds (DAFs) or non-cash donations.

Reduced Charitable Deduction for Itemizers

Taxpayers who itemize will lose part of their charitable deduction—specifically, 0.5% of their adjusted gross income (AGI). This creates a subtle but permanent haircut on deductions, reducing the overall value of your charitable giving from a tax perspective.

For example, if your AGI is $400,000, 0.5% of that is $2,000. That means if you donate $20,000 to charity and itemize, only $18,000 of that donation would be deductible under the new rules.

Limitation on Deduction Value for High Earners

For those in the top tax bracket, the tax benefit of charitable giving is set to shrink. Starting in 2026, the value of your charitable deductions will be capped at 35%, down from the current 37%. This reduction comes on top of a new rule that reduces your eligible deduction by 0.5% of your adjusted gross income (AGI).

For example, suppose your AGI is $1 million in 2026 and you make a $50,000 charitable donation:

• You’d lose 0.5% of your AGI, or $5,000, from your deductible amount, leaving $45,000 eligible for a deduction.
• With the new 35% limit, your tax savings would be $15,750 ($45,000 × 35%).

Under current rules, you’d be able to deduct the full $50,000 at 37%, resulting in $18,500 in tax savings. That’s $2,750 more than you’d save under the new rules, highlighting just how impactful proactive tax planning in 2025 can be.

What’s Not Changing

Qualified charitable distributions (QCDs) from IRAs continue to be one of the most tax-efficient ways for retirees to give. They remain fully deductible, are excluded from your adjusted gross income (AGI), and are unaffected by the upcoming changes, making them a valuable giving strategy both now and under the new rules.

5 Smart Giving Strategies to Consider Before 2026

The OBBBA introduces significant changes to the tax code, but there’s still a window of opportunity to make the most of today’s more favorable rules. Below are several strategies worth considering before the end of the year:

#1: Accelerate Donations into 2025

If you’re planning to make sizable gifts over the next few years, consider front-loading your giving into 2025. By accelerating your donations, you can take advantage of the current, more favorable deduction rules while they still apply.

This strategy may be especially beneficial if:

• You’re already itemizing deductions in 2025.
• You expect your income to decline or your deductions to shrink in future years.
• You’re a high earner who wants to maximize the current 37% deduction limit.

If you’re unsure whether you’ll itemize this year, projecting your 2025 tax return with your financial planner or CPA can help you make a more informed decision.

#2: Bunch Donations to Maximize Itemized Deductions

Even if you don’t usually give large amounts in one year, you might benefit from “bunching” multiple years’ worth of charitable gifts into 2025 to exceed the standard deduction threshold and maximize your tax savings.

For example, instead of giving $10,000 each year in 2025 and 2026, you could give $20,000 in 2025, itemize your deductions that year, and then take the standard deduction in 2026. This approach allows you to optimize tax efficiency across multiple years without changing the total amount you give.

This approach can be especially effective when paired with a donor-advised fund, which allows you to make the full donation in 2025 but distribute the funds to charities over time.

#3: Make Non-Cash Donations While They Still Count

Under the OBBBA’s new rules taking effect in 2026, non-cash donations such as clothing, household goods, or appreciated securities won’t qualify for the new above-the-line deduction available to non-itemizers. That means if you plan to take the standard deduction in future years, you won’t receive any tax benefit for these types of gifts unless you itemize.

If you currently itemize but expect to take the standard deduction going forward, it’s wise to make any planned non-cash donations in 2025. That way, you can still deduct their value under the current rules.

Examples of non-cash items you might consider donating this year include:

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

Be sure to keep documentation for anything you donate, especially for items valued over $500.

#4: Use QCDs if You’re Age 70½ or Older

Qualified charitable distributions (QCDs) are one of the most tax-efficient ways to give for retirees. If you’re age 70½ or older, you can direct up to $108,000 in 2025 (indexed for inflation) from your traditional IRA directly to a qualified charity, satisfying required minimum distributions (RMDs) in the process.

Here’s why QCDs are so valuable:

• They do not increase your AGI, which can help you avoid Medicare premium surcharges and other income-related tax thresholds.
• They aren’t impacted by the OBBBA changes (QCDs retain full tax benefit after 2025).
• You can give to multiple charities in a single year while keeping your tax situation streamlined.

Keep in mind: to receive the tax benefit of a QCD, you must transfer the funds directly from your IRA custodian to the charity. If you withdraw the money yourself first, it will count as taxable income and won’t qualify as a QCD.

#5: Open or Contribute to a Donor-Advised Fund (DAF)

Donor-advised funds allow you to make a large, deductible contribution now, while distributing the funds to charities over time. This is especially useful if you want to bunch donations or preserve the current tax deduction value while still supporting causes gradually.

With a DAF, you:

• Receive a deduction in the year you contribute.
• Retain the ability to recommend grants to charities on your own timeline.
• Can contribute appreciated assets (like stock), avoiding capital gains while still receiving the full deduction value (if you itemize).

Remember: DAF contributions won’t count toward the OBBBA’s new above-the-line deduction for non-itemizers in 2026 and beyond, so if you’re planning to take the standard deduction in the future, now is the time to use a DAF for maximum tax efficiency.

Making the Most of This Window of Opportunity

The upcoming changes to charitable giving rules under the OBBBA may not require a full rewrite of your financial strategy, but they do present an opportunity to be more intentional and tax-savvy about how and when you give. If philanthropy is part of your plan, taking action before year-end could help you make a bigger impact while maximizing your tax efficiency.

At SageMint Wealth, we’re here to help you use your wealth as a tool for good, whether that means supporting the causes you care about, providing for your family’s future, or both. If you’re ready to align your giving strategy with your broader financial goals, our team can help you craft a plan that reflects your values. Reach out to start the conversation.

Disclaimer:

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.