Beginning in 2026, new tax law changes may reduce the value of charitable deductions for many higher-income earners.
One of the biggest changes is that charitable contributions may only become deductible after exceeding 0.5% of your adjusted gross income (AGI). Simply put, this means a portion of your charitable giving each year may no longer qualify for a deduction the way it has in the past.
The good news is there are still strategies that may help you continue giving generously while being more tax-efficient.
Here are 3 approaches worth talking about:
- Bunch your charitable giving into one year
Instead of donating the same amount every year, some families are combining several years of giving into one larger contribution. Since the new rules apply a 0.5% AGI threshold, consolidating gifts into one year may help reduce how often that limitation affects your deductions. - Consider opening a donor-advised fund
A donor-advised fund can allow you to potentially receive the tax deduction upfront while distributing gifts to charities over time. One of my favorite benefits is that donor-advised funds may allow you to contribute appreciated stocks directly instead of selling them first. In many cases, this can help you avoid capital gains taxes while still supporting the charities and causes you care about.
I’ve opened donor-advised funds for clients as a way to create more flexibility, simplicity, and organization around their charitable planning.
- Coordinate giving with high-income years
If you anticipate a large bonus, business sale, stock option exercise, or significant capital gain, those years may create greater opportunities for tax-efficient charitable giving.
As always, charitable and tax planning should be coordinated with your CPA and financial advisor, but these are conversations I’m starting to have with many of my affluent clients.
If you’d like to talk through whether any of these strategies could make sense for your situation, just reach out to schedule a quick chat with my team HERE: https://go.oncehub.com/JoyceRojas