Many individuals and families support charitable organizations year after year using the same approach. They write checks to causes they care about, claim the available tax deduction, and move on.
Beginning in 2026, taxpayers who itemize deductions will see a reduction in their total charitable contribution deduction through a 0.5% phaseout based on adjusted gross income. Taxpayers in the highest federal tax bracket of 37% will see an additional reduction in the value of their charitable deduction.
As a result, strategies that have worked well in the past may deserve a second look.
The good news is that this is not necessarily a story about giving less. It is a story about giving more intentionally and strategically.
Why It Matters
For certain taxpayers, changes affecting charitable deductions may reduce the value of charitable deductions compared to prior years. At the same time, many individuals continue making charitable contributions using methods that may not be the most tax-efficient approach available to them.
For example, some taxpayers make charitable contributions directly from their checking account without realizing that alternative strategies may provide greater tax efficiency depending on their circumstances.
In our experience, charitable giving is often connected to broader financial decisions involving retirement income, investment portfolios, estate planning, and long-term family goals. When these areas are coordinated, clients may be able to maximize both their charitable impact and tax efficiency.
Potential Planning Opportunities
Depending on your circumstances, opportunities may include:
- Making charitable gifts with appreciated securities rather than cash
- Coordinating charitable giving with retirement distributions via Qualified Charitable Distributions (QCDs)
- Reviewing donor-advised fund strategies
- Timing charitable gifts to maximize available tax benefits
Not every strategy is appropriate for every taxpayer, but many are worth evaluating as part of a broader tax and financial planning discussion.
A Good Time to Review
Now may be a good time to revisit your charitable giving strategy and determine whether your current approach is still the most tax-efficient option. Use our Charitable Giving Worksheet to get a quick initial perspective on how these changes may impact your situation. While the worksheet can help identify potential planning opportunities, your tax or financial advisor can help determine the strategies that are most appropriate for your unique circumstances.
Contact our team to discuss your results and explore opportunities to improve tax efficiency while continuing to support the causes that matter most to you.
