As year-end approaches, charitable giving presents an opportunity to align philanthropic goals with broader wealth and tax planning strategies. Beginning this year, several new tax law changes may affect the tax benefits of charitable contributions. Understanding these changes may help evaluate giving strategies and identify opportunities to optimize tax planning before year-end.
A Charitable Giving Benefit for More Taxpayers
Starting this year, taxpayers who claim the standard deduction can also take advantage of a new deduction for charitable contributions. The annual limit is $1,000 for single taxpayers and $2,000 for married couples filing a joint return. Because most taxpayers do not itemize deductions on their return, this provision creates an opportunity for many households to realize modest tax savings from their charitable giving. Note that only cash contributions to eligible charitable organizations qualify for this deduction. Contributions to supporting organizations, private foundations or donor-advised funds are excluded. Donations of non-cash assets, such as stocks or real property, also do not qualify.
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Action step: To benefit from this new deduction, donations still need to be documented. Make sure to keep records and receipts of cash contributions during the year for tax filing purposes, including:
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A New Hurdle for Charitable Giving Tax Benefits
While the new tax law creates a charitable deduction opportunity for non-itemizers, it also introduces a limitation that may reduce the tax benefits of charitable giving for taxpayers who itemize deductions. Beginning in 2026, taxpayers who itemize charitable contributions can claim a deduction only to the extent their total donations exceed 0.5% of their adjusted gross income (AGI). Consider this example:
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Action steps: Taxpayers subject to this new limit may want to consider the following potential options:
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For more information, see our piece “Understanding Charitable Giving Strategies”.
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