Charitable Giving Tax Strategies for 2026: What High-Income Donors and Everyday Givers Need to Know

Charitable giving has long been a pillar of tax strategy for high-income households. Whether you’re supporting a family foundation, donating appreciated assets or funding a donor-advised fund, itemized deductions often play a central role in preserving wealth and furthering causes that matter. But starting in 2026, those rules are changing.

Thanks to the One Big Beautiful Bill Act (OBBBA) passed in July 2025, itemizers — especially those with high adjusted gross income (AGI) — will face new limitations on how much of their charitable giving is deductible. Meanwhile, a new deduction for standard deduction filers is returning for the first time since the pandemic.

Here’s what every high-net-worth donor needs to know now to maximize tax efficiency and charitable impact in the years ahead.

What high-income itemizers need to know

If you itemize your deductions (especially if your giving strategy involves large donations, donor-advised funds or estate planning), 2026 brings two significant changes that could limit your tax benefit:

A new 0.5% AGI floor on charitable deductions

Beginning in 2026, the first 0.5% of your adjusted gross income is no longer deductible for charitable contributions. If your AGI is $1 million, that means the first $5,000 of donations won’t reduce your taxable income.

A cap on the value of itemized deductions (known as the 2/37 haircut)

This new limitation reduces the benefit of itemized deductions for high earners. Specifically, at higher income levels, the total value of your deductions is reduced by 2/37ths, or roughly 5.4%. This effectively limits the benefit of itemized deductions to 35% instead of the maximum tax rate of 37%. That means for every dollar you donate (or deduct through SALT or mortgage interest), your tax savings may be less than expected.

Let’s look at a simple example. Imaging you have $800,000 AGI and donate $50,000 to public charities in 2026.

• First, the 0.5% floor means the first $4,000 of that gift isn’t deductible.
• That leaves $46,000 in potential deductions.
• However, the 2/37ths rule limits the benefit of all itemized deductions to about $43,514 (46,000 – 46,000 * 2/37).

In short, the tax value of charitable giving is being compressed at the top, especially for those in the 37% bracket who previously received nearly dollar-for-dollar deduction benefits.

What this means for itemizers

These changes don’t eliminate the benefit of giving, but they require sharper planning. Here’s what to consider now.

Accelerate giving in 2025. If you’re considering large charitable gifts or funding a donor-advised fund, doing so before year-end could preserve more of your deduction under the current, more favorable rules.

Review bunching strategies. If you typically bunch deductions every other year to exceed the standard deduction threshold, the new haircut rule may reduce its value. Talk to your advisor to reassess.

Leverage Qualified Charitable Distributions (QCDs). For IRA owners 70½ and older, QCDs remain excluded from AGI and untouched by the new caps — making them a more valuable giving tool in 2026 and beyond.

Coordinate giving with estate plans. The reduction in current-year deductibility may shift some strategies toward legacy gifts, charitable trusts or structured giving vehicles that achieve impact across time.

For tailored estate planning guidance that aligns with your giving goals, visit our Estate Planning Services.

To understand how these changes affect deduction rules, the IRS page on charitable contributions offers additional context.

What non-itemizers need to know

While itemizers face stricter limits starting in 2026, the new law offers a modest win for those who take the standard deduction. The One Big Beautiful Bill Act (OBBBA) reinstates a limited above-the-line deduction for charitable contributions made in 2026. This deduction allows non-itemizers to reduce taxable income by up to $2,000 for married filers ($1,000 for singles) for gifts made to qualifying public charities.

To be eligible, contributions must be:

• Made in cash, not property or appreciated stock
• Given directly to a public charity, not donor-advised funds or private foundations
• Supported by written acknowledgment for any gift over $250

This deduction doesn’t match the benefits itemizers receive, but it’s a valuable incentive for taxpayers who make regular gifts and don’t itemize. It also sends a broader signal that Congress is re-evaluating ways to reward charitable giving across income levels.

Still, high-income filers who normally itemize shouldn’t default to this standard deduction strategy. Even with the haircut rule, strategic itemizing typically yields greater tax savings, especially when paired with estate planning or large-scale gifts.

Plan ahead: What to consider before year-end 2025

With these new limits arriving in 2026, this year is a critical window for strategic giving. Here are key actions to consider before Dec. 31, 2025.

Frontload planned donations

If you’re already planning multi-year gifts or funding a donor-advised fund, completing those contributions in 2025 allows you to deduct under the current rules without an AGI floor or 2/37 haircut.

Review estate and charitable coordination

Many high-net-worth families use charitable giving to reduce the taxable value of their estates. With deduction caps on the horizon, it’s worth revisiting:

• Charitable remainder trusts (CRTs)
• Gifting strategies using appreciated assets
• Philanthropic plans built into your estate documents

Stay current on IRS guidance

Tax professionals are closely watching how the IRS will enforce the 2/37 rule, especially in cases where charitable giving occurs alongside other high-dollar deductions like SALT and mortgage interest. The IRS charitable contributions hub is a solid resource for eligibility, valuation and recordkeeping standards.

2026 and beyond: Aligning giving with long-term tax planning

For high-net-worth households who itemize, the OBBBA doesn’t eliminate charitable tax benefits; it compresses them. That makes long-term planning more important than ever.

Here’s what we’re helping clients evaluate now.

Multi-year giving strategies

Donor-advised funds (DAFs) and charitable trusts remain valuable tools for managing multi-year commitments, especially when paired with income planning. Even with a haircut cap, careful structuring can protect some value of these gifts across several years.

Timing still matters

Since the AGI floor and haircut apply per year, it may make sense to alternate high and low-giving years or spread donations to stay within thresholds. If you’re also taking large SALT or mortgage interest deductions, charitable gifts may be crowded out. Shifting timing can protect the benefit.

Don’t forget Qualified Charitable Distributions (QCDs)

If you’re 70½ or older and have IRAs, you can make up to $100,000 in direct charitable contributions per year without increasing your AGI. Since QCDs aren’t included in AGI, they bypass both the haircut and 0.5% floor. This makes them one of the most tax-efficient giving options in 2026 and beyond.

Final thoughts: Tax-wise giving starts now

The charitable giving landscape is shifting yet again. For high-income filers who itemize, 2026 will bring an AGI floor and a sharp cap on deductions that reduce the tax value of giving. For non-itemizers, there’s a limited new opportunity to deduct cash gifts.

Smart giving will require more than generosity—it demands strategy. That’s why we’re encouraging our clients to take action in 2025 while deduction rules remain in their favor.

To plan effectively, document gifts thoroughly, and align charitable intent with financial outcomes, work with professionals who understand how giving fits into the big picture.

Contact a James Moore professional to discuss how these changes may affect your 2025 and 2026 giving plans.

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