Year-End Giving in 2026: New Charitable Deductions, Tighter Limits for High Earners

What Changes for Charitable Giving in the 2026 Tax Year

The end-of-year charitable giving season is underway, and for the 2026 tax year the rules have shifted in ways that affect both occasional donors and wealthy households. The most widely applicable change is a new charitable deduction for people who do not itemize: single filers can claim up to $1,000 and married couples filing jointly up to $2,000, on top of the standard deduction. That standard deduction itself has risen to $16,100 for single filers and $32,200 for joint filers, with an extra $6,000 per qualified individual for those aged 65 and older — though that bonus phases down by 6% for every dollar of income above $75,000 for individuals or $150,000 for couples.

For households that do itemize, the calculus is more complicated. Charitable contributions remain deductible up to a percentage of adjusted gross income, but starting this year high earners face two new constraints. Anyone in the top 37% bracket will see the tax benefit of itemized charitable deductions reduced to 35%, and itemized charitable deductions will be trimmed by 0.5% of AGI. As CPA Ed Slott illustrated, a donor with $400,000 of AGI would see a $2,500 charitable deduction cut by $2,000, leaving only $500 of deductible value.

The practical response, advisers say, is to concentrate giving rather than spread it out. A donor-advised fund — an account opened at firms such as Fidelity, Schwab or Vanguard — allows a donor to contribute cash, stocks, mutual funds or ETFs, receive an immediate deduction, and then grant money to charities over time with no deadline. Because the deduction is taken in the year of contribution, bundling two years of planned giving into one can push a household over the standard deduction threshold and into itemizing territory. Donating appreciated securities rather than cash also avoids capital gains tax that would be owed if the stock were sold first.

Older donors with pre-tax retirement assets have a separate tool: the qualified charitable distribution. From age 70½, an IRA owner can transfer funds directly from the IRA to a qualifying charity, up to $111,000 for 2026, and exclude the amount from taxable income. The transfer counts toward required minimum distributions. Both Slott and CFP Ann Reilley warn against waiting until late December, when IRA custodians are processing a flood of QCD and RMD transactions and employer matching deadlines also fall on December 31.

Why the Rules Now Favour Bunching, DAFs and IRA Transfers

Why the Standard Deduction Is the Real Battleground

The headline numbers — $16,100 single, $32,200 joint — matter less than the gap they create. Most households' charitable giving is far too small to push total itemized deductions above the standard amount, which is precisely why Congress added the non-itemizer charitable deduction of up to $1,000 or $2,000. For a donor in the 22% bracket giving $1,000, that is worth roughly $220 in federal tax savings — modest, but the first time many middle-income households get any federal tax benefit from giving at all.

Bunching Becomes the Default Strategy for Itemizers

Ann Reilley's suggestion to give two years' worth of deductions in one year is not new advice, but the 2026 arithmetic makes it sharper. With the standard deduction higher and the itemized charitable benefit capped for top earners, the only way many donors clear the itemizing threshold is to concentrate contributions. A donor-advised fund is the mechanism: the deduction lands in the contribution year, while the granting to charities can be spread across years with no time limit. Fidelity Charitable data cited in the article — nearly half of its accounts held under $25,000 last year — undercuts the perception that DAFs are only for the very wealthy.

The Appreciated-Securities Angle

Reilley's point about "candidates" in a portfolio reflects several years of strong market gains. Donating appreciated stock or ETFs to a DAF delivers two benefits simultaneously: the donor avoids the capital gains tax that would be triggered by selling, and the deduction is based on the full market value of the donated asset. For a household sitting on long-held positions with large embedded gains, this can be materially more valuable than writing a cheque — and it is the reason advisers are flagging 2026 specifically rather than treating it as a routine giving year.

High Earners Face a Genuinely Smaller Benefit

The two new limits on itemized charitable deductions are the most consequential change for wealthy donors. Reducing the benefit from 37% to 35% is a modest haircut, but the 0.5%-of-AGI reduction is more aggressive at scale. Slott's example — $400,000 of AGI, a $2,500 deduction reduced to $500 — shows how quickly the second rule can erode the value of smaller gifts from high-income households. The offsetting factor is the higher $40,400 state and local tax cap, which for donors in New Jersey, New York or California may be what tips them into itemizing in the first place.

QCDs and the December Bottleneck

For donors aged 70½ and over, the qualified charitable distribution remains the cleanest structure: the transfer goes directly from the IRA to the charity, is excluded from taxable income, and counts toward the required minimum distribution. The $111,000 per-owner limit for 2026 is generous relative to prior years. The operational risk is timing. Because the distribution must be completed by year-end and does not appear as a charitable gift on the 1099 form, donors need to instruct their accountant explicitly — and Slott's warning about custodians being "flooded" in the final two weeks is a practical constraint, not a hypothetical one.

Where This Leaves Employers and Advisers

Employer matching programmes typically close on December 31, and some restrict matches to a pre-approved charity list. That creates a parallel deadline that donors often discover too late. For financial advisers, the 2026 changes are a natural prompt to revisit clients' giving structures — particularly those with appreciated positions, IRA assets, or income near the new phase-out thresholds.

What Donors Should Do Before December 31

The single most useful move for most donors this year is to complete charitable transactions by the first week of December, not the last two weeks of the year.

IRA custodians process a surge of QCD and RMD requests in late December, and employer matching deadlines fall on December 31. Both create execution risk that is entirely avoidable.

For donors who do not itemize

• Claim the new non-itemizer charitable deduction — up to $1,000 single, $2,000 joint for 2026 — on top of the standard deduction. This is available regardless of whether you itemize.
• If you are 65 or older, confirm whether the extra $6,000 per qualified individual applies to you, and check whether your income exceeds $75,000 single or $150,000 joint, which triggers the 6%-per-dollar phase-down.

For donors who itemize or are near the threshold

• Consider bunching two years of giving into a single donor-advised fund contribution to clear the $16,100 / $32,200 standard deduction. Check minimum account sizes and annual administrative fees at Fidelity, Schwab or Vanguard before opening.
• Fund the DAF with appreciated securities rather than cash where possible — you avoid the capital gains tax on the sale and the deduction reflects the full market value.
• If you live in a high-tax state such as New Jersey, New York or California, factor in the $40,400 state and local tax cap for 2026, which may be what allows you to itemize at all.

For donors aged 70½ and over with pre-tax IRA assets

• Use a qualified charitable distribution of up to $111,000 per IRA owner for 2026. Instruct your custodian to transfer funds directly to the charity, and tell your accountant explicitly — the 1099 will not flag the distribution as charitable.
• Confirm the QCD counts toward your required minimum distribution before year-end.

For high earners in the top bracket

• Recalculate the actual value of your charitable deduction at 35% rather than 37%, then apply the 0.5%-of-AGI reduction. At $400,000 AGI, that reduction alone is $2,000 — enough to wipe out the deductible value of a $2,500 gift.

For everyone with an employer match

• Check your employer's match deadline (typically December 31) and whether it is restricted to a partner charity list. Route matched gifts accordingly before the cut-off.