Key Changes for Donors Starting in 2026

Beginning in 2026, new tax rules will affect how individual donors can deduct charitable gifts if they itemize deductions on their personal income tax return. Under the new law:

• You can only claim a charitable deduction if your total annual giving exceeds 0.5% of your Adjusted Gross Income (AGI). This new charitable deduction “floor” means that, for example, if your AGI is $100,000, you must donate more than $500 in a year before any of your charitable contributions become deductible.
• There is a new 35% cap on the value of itemized deductions, including the charitable contribution deduction. This means that high earners in the 37% tax bracket will not get dollar-for-dollar value from the deduction for their charitable gifts.
• The legislation introduces a new universal charitable deduction of $1,000 for individual taxpayers and $2,000 for married couples filing jointly—even if you do not itemize. This permanent deduction is available to anyone taking the standard deduction, making it easier for all donors to receive a tax benefit for giving.
• The 2017 Tax Cuts and Jobs Act included a provision that allows itemizers to deduct cash donations up to 60% of AGI. With the new legislation, this provision is now made permanent.

Now is the time to evaluate your philanthropic plan. Recently enacted tax legislation may affect the financial planning strategies you’ve developed with your advisors.

Here are some tips to help you and your attorney, CPA, and financial advisor assess whether adjustments to your charitable plan might be beneficial.

2025 is important if you itemize deductions on your income tax return.

If you itemize deductions, 2025 presents a significant window of opportunity! The OBBBA increases the standard deduction in 2025, and starting in 2026, your itemized charitable deductions will be subject to a “floor” and cap. A strategy called “bunching” could allow you to establish or make substantial contributions to your donor-advised fund at the Foundation in 2025 to maximize your itemized deductions. Then, in subsequent years, you can use your donor-advised fund to support your favorite local or national charities. Donating appreciated stock is particularly strategic, allowing you to avoid capital gains tax while receiving a deduction for the full market value of your shares.

Stick to the basics.

While much is changing, many fundamentals remain! Appreciated stock continues to be a significantly more tax-efficient charitable gift than cash, so keep this strategy top of mind. Additionally, IRAs remain a powerful charitable planning tool. When you name a fund at the Foundation as the beneficiary of an IRA, the gift avoids both estate tax and income tax, which can otherwise significantly impact your heirs.

Know the opportunities if you are 70 ½ or older.

If you are 70 ½ or older, the Qualified Charitable Distribution (QCD) is an excellent way to transfer up to $108,000 (2025’s per-taxpayer limit) income-tax free to qualified charities, including certain types of funds at the Foundation.

Please reach out to our team at the Foundation; contact Monika Collins at mcollins@delcofoundation.org to learn more. We would be honored to participate in your planning conversations. We’re here to help in many ways!

For more details on other provisions of the new tax law that relate to charitable giving, we recommend this comprehensive article, and its accompanying resources, produced by our partners at Stelter: New Tax Law: What’s Staying, What’s Changing and What It Means for You.