With the April 15 filing deadline behind us and the second half of the year underway, now is a great time to start looking ahead to your 2026 taxes. As we transition into the fall, many taxpayers begin looking for opportunities to reduce their tax liability before the year ends.
Charitable giving is one of the most common ways taxpayers support the causes they care about while potentially reducing their taxable income. While donating to a good cause is always a great idea, the tax benefits associated with your generosity are shifting. Thanks to the sweeping “One Big Beautiful Bill” passed on July 4, 2025, charitable giving rules will look a little different starting in 2026.
Here is what you need to know about the new tax landscape and how to optimize your charitable impact.
Historically, you could only write off charitable donations if you itemized your deductions. For the vast majority of taxpayers who take the standard deduction, giving to charity didn’t offer any direct, additional tax relief.
The new legislation introduces a highly positive change: an “above-the-line” charitable deduction available even if you take the standard deduction. Taxpayers can now deduct up to $2,000 if married filing jointly (or $1,000 if filing single). This provides an added incentive for everyday giving, and this specific benefit is currently slated to run through 2028.
While non-itemizers get a boost, there is a slight drawback for those who do itemize their deductions. Under the new rules, your total deductible charitable donations will be reduced by 0.5% of your Adjusted Gross Income (AGI).
How It Works in Practice: Let’s say your AGI is $200,000, and you make $15,000 in charitable donations over the course of the year. Your deduction will be reduced by $1,000 ($200,000 x 0.5%). This means you will only receive a tax benefit for $14,000 of your giving, rather than the full $15,000.
Unlike the non-itemizer benefit, this limitation does not expire. Because of this, taxpayers may want to strategically “stack” or “bunch” their donations into a single tax year rather than spreading them out annually to minimize the negative impact of the AGI reduction.
Tax Planning Tip: Donor Advised Funds (DAFs) are an excellent tool for this strategy. A DAF allows you to make a large, tax-deductible contribution in one year (maximizing your available deduction), while granting you the flexibility to distribute those funds to your favorite charities gradually over several years.
For high-income earners, there is an additional limitation to keep in mind. If you are in the top 37% tax bracket, the One Big Beautiful Bill further limits the tax benefits of your giving by capping the deduction value at 35%.
For example, a taxpayer in the 37% bracket who makes $10,000 in charitable donations will now only realize $3,500 in tax savings, rather than the $3,700 they would have received under the 2025 rules.
While it wasn’t changed by the recent bill, it’s always worth reminding taxpayers over age 70 ½ about the significant tax advantages of Qualified Charitable Distributions (QCDs).
If you meet the age requirement, you can donate directly from your IRA to an eligible charity. This allows eligible taxpayers to exclude the donated amount from taxable income while still taking the full standard deduction. For 2026, the maximum QCD limit is $111,000 for a single taxpayer and $222,000 for a married couple.
This is an especially powerful strategy for retirees who are subject to Required Minimum Distributions (RMDs) but want to keep their recognized income lower to avoid higher tax brackets or Medicare premium surcharges.
While a tax break should never be the sole reason you give to charity, it is always helpful to understand how your generosity impacts your financial picture.
If you are concerned about your future tax liabilities and want to explore how strategic donations can strengthen your 2026 tax planning strategy, we are here to help. Reach out to emc today to discuss strategies that support both your financial goals and the causes you care about.