By Jeff Daniher, CFP®, AEP®, CTFA, CLU
For most people, the decision to support a cause starts with the cause itself. A church, a school, a hospital, or a local nonprofit earns our loyalty over years, and the tax deduction that comes with a gift has always been a secondary benefit. Even so, the way a gift is made can affect how much good it does, both for the charity and for your own financial plan. That matters more this year than it has in a long time, because the One Big Beautiful Bill Act, the tax law passed in the summer of 2025 that the IRS now refers to as the Working Families Tax Cuts, changed several charitable giving rules, and those changes took effect on January 1, 2026.
The good news is that generous families still have plenty of effective ways to give. The habits that worked well for the last decade, though, may not be the most efficient approach going forward. With the end of the year approaching, now is a good time to understand what changed and whether your giving plan should change with it.
What changed this year
Three new rules now shape how charitable gifts are treated on a federal tax return:
- A new floor for itemizers. If you itemize deductions, only the portion of your giving that exceeds 0.5% of your adjusted gross income (AGI) is deductible. For a household with $200,000 of AGI, the first $1,000 of gifts no longer produces a deduction.
- A new deduction for non-itemizers. If you take the standard deduction, you can now deduct up to $1,000 of cash gifts to qualifying charities, or up to $2,000 for married couples filing jointly. Gifts of property, such as stock, don’t qualify, and neither do contributions to donor-advised funds.
- A cap for top earners. For taxpayers in the highest federal bracket, the tax benefit of itemized deductions, including charitable gifts, is now limited to 35 cents on the dollar, even though their income is taxed at a higher rate.
Each of these rules is fairly simple on its own. The challenge is that they pull in different directions, so the same change can help one family and quietly cost another.
Who comes out ahead, and who gives a little up
The clearest winners are people who give modestly and take the standard deduction, which describes most American households. For years, their gifts produced no tax benefit at all. Now a married couple who writes $2,000 in checks to their church or local food bank can deduct that amount without itemizing anything.
I hear some version of the same comment almost every year from clients who give regularly but don’t itemize: “I know my donations don’t count for anything on my taxes, so I don’t bother keeping track.” For several years, that was mostly true. Starting this year, it isn’t, so those receipts from church, the school fundraiser, and the local food bank are worth holding on to again.
Steady, consistent givers who itemize feel the floor most. Because it is tied to income instead of to the size of the gift, a household with $400,000 of AGI loses the deduction on its first $2,000 of giving every single year, whether it gives $5,000 or $50,000. Higher earners also run into the 35% cap, which slightly reduces the value of each deductible dollar. None of this is dramatic for any single year, but over a decade of regular giving it adds up to real money that could have stayed in your plan or gone to the causes you care about.
Bunching: giving in bigger, less frequent years
Since the floor applies once per year, one of the most useful responses is to give in fewer, larger years. This approach, often called bunching, means combining two or three years of planned gifts into a single tax year and then giving little or nothing from your own pocket in the years in between. It matters all the more because the portion of your giving lost to the floor generally can’t be carried forward to a future year, so every year you give a modest amount and itemize, that slice is simply gone.
Consider a couple with $200,000 of AGI who give $10,000 a year. If they give the same amount every year and itemize, they lose $1,000 to the floor each time, or $3,000 over three years. If they instead give $30,000 in one year, they lose only $1,000 to the floor that year and can take the standard deduction in the other two. The total giving is the same, but more of it counts.
A donor-advised fund makes bunching easier to live with. You contribute a larger amount to the fund in one year and receive the deduction then, but you can recommend grants to individual charities over time. Your favorite organizations keep receiving steady support on the schedule they rely on, while your tax return sees one larger gift instead of several smaller ones.
Giving from the right pocket
The source of a gift can matter as much as its size. If you have held stocks or funds in a taxable account for more than a year and they have grown in value, donating those shares directly to a charity or a donor-advised fund is often more efficient than selling them and donating cash. You generally avoid the capital gains tax on the growth, and if you itemize, you can usually deduct the full market value of the shares, subject to income limits. The charity receives the same amount either way.
For anyone 70½ or older, a qualified charitable distribution (QCD) may be the strongest option available. A QCD sends money directly from your IRA to a qualifying charity, up to $111,000 per person in 2026. Because the money is excluded from your income instead of deducted, the new floor and the 35% cap don’t apply at all, and you receive the full benefit whether or not you itemize. Once you reach the age for required minimum distributions, a QCD can also count toward that requirement. Keeping that income off your return can help in other places too, since a lower AGI can affect Medicare premiums and the taxation of Social Security benefits. QCDs can’t be made to donor-advised funds, so they work best for gifts going straight to a church, school, or other public charity.
A note on big-income years
Because the floor rises with income, it hits hardest in years when income spikes. Selling a business, exercising stock options, or receiving a large bonus can push AGI well above normal, and the floor rises right along with it. A business owner with $3 million of income in the year of a sale faces a $15,000 floor before any gift becomes deductible. In years like these, the size and timing of charitable gifts deserve careful planning ahead of the transaction, ideally with your advisor and CPA looking at the same projections.
Timing matters before December 31
To count for 2026, a gift has to be completed by the end of the year. A check generally counts when it is mailed, but stock transfers and QCDs depend on custodians and charities finishing their side of the paperwork, and both get busy in December. Starting in October or November leaves room for the occasional delay without putting your gift or your deduction at risk.
Giving with intention
These rules shouldn’t change why you give, and for many families they won’t change how much you give either. What they may change is how and when you give, and those choices can make the same generosity go further. A short conversation about your giving goals, your income for the year, and the accounts you hold is often enough to find a better approach. If you would like to review your charitable plan before year-end, reach out to your advisor or contact any of our Bluespring Wealth – River Valley offices in Cincinnati, Lexington, or Cleveland.
Jeff Daniher is the Director of Wealth Management based in Bluespring Wealth’s Cincinnati office. With more than 40 years of industry experience, he helps clients clarify their goals, navigate important financial decisions, and build plans that support the life they want to live. Known for his thoughtful approach and ability to simplify complex topics, Jeff focuses on helping clients stay grounded in what matters most rather than getting distracted by short-term noise.
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