How to Give to Charity Under the New OBBBA Rules

The season of giving is almost here, and now is the perfect time to revisit your charitable plans with your financial advisor. Thoughtful planning can help you maximize both the impact of your gifts and the tax benefits you receive.

Looking ahead, starting in 2026 the new One Big Beautiful Bill Act (OBBBA) will bring important changes to the way charitable giving is treated. If supporting causes you care about is part of your financial goals, here’s what you need to know.

What’s Changing in 2026

1. A new deduction for non-itemizers.
   If you don’t itemize deductions, you can still deduct up to $1,000 (single) or $2,000 (married) in cash gifts to charity each year.
2. A new threshold for itemizers.
   If you do itemize, the first 0.5% of your adjusted gross income (AGI) won’t count toward charitable deductions.
3. A cap on total deductions.
   The total benefit from itemized deductions can’t exceed 35% of income. This especially impacts taxpayers in the highest (37%) bracket.

If You’re Over Age 70½

For those with IRA accounts, Qualified Charitable Distributions (QCDs) remain one of the most tax-efficient ways to give. With a QCD:

• The gift goes directly from your IRA to the charity.
• It doesn’t show up as income or a deduction on your tax return.
• It helps keep your AGI lower, which can reduce Medicare premiums.
• It also counts toward your Required Minimum Distribution (RMD).

Starting in 2025, custodians will issue a separate 1099-R that clearly reports how much of your IRA distribution went directly to charity.

If You Give $2,000 or Less Each Year

You can take advantage of the new non-itemizer deduction. Just remember:

• For gifts under $250, a bank record is enough.
• For gifts of $250 or more, you’ll need a receipt from the charity.
• In-kind gifts (like donating securities, goods, or cars) don’t qualify under this rule.

If You Give Larger Amounts

You may want to consider a charitable bunching strategy:

• Make a large gift in one year (to maximize itemized deductions).
• Then take the standard deduction in off-years.
• A Donor Advised Fund (DAF) can help smooth your giving—fund it once, then recommend grants to charities over time.¹

Another powerful option is donating appreciated securities. You get a deduction for the full market value while avoiding capital gains tax.

Tip: Because the 0.5% threshold doesn’t start until 2026, 2025 may be a smart year to make a larger charitable contribution.

Practical Tips for Everyone

• Communicate with your charities. Let them know about gifts from securities or IRAs so they can record them correctly.
• Loop in your advisor and tax preparer. They can help ensure your giving strategy also reduces your tax burden.

Remember Why You Give

While taxes matter, charitable giving is about more than deductions. It’s about supporting causes you believe in, strengthening your community, and living your values. The tax rules simply help you do that in a smarter way.

If you’d like to create a giving plan tailored to your situation, our team is here to help.

1 Per IRS.gov: Generally, a Donor Advised Fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor’s representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account.

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