Smart Charitable Giving Strategies to Prepare for 2026 Tax Changes

Beginning in 2026, the One Big Beautiful Bill Act (OBBA) will reshape the way donors — both itemizers and non-itemizers — can claim deductions.

The good news? With thoughtful planning in 2025, these changes present opportunities to be both generous and tax-savvy.

Below is a breakdown of the most relevant updates related to charitable deductions and a few giving strategies worth considering for your year-end planning. And, if you have any questions, our team is ready to help refine your giving approach for greater community impact.

What’s Changing in 2026

Starting January 1, 2026, three changes will alter how donors calculate their charitable deductions:

1. A new non-itemizer deduction (with limits)

The OBBBA averted a significant decrease in the standard deduction planned for 2026. In fact, for the 2025 tax year, the standard deduction will rise to $15,750 for single filers and $31,500 for married couples filing jointly, with additional amounts available to those 65 and over.

Beginning in 2026, donors who take the standard deduction can also claim a new above-the-line charitable deduction of up to $1,000 for individuals or $2,000 for joint filers. This creates a modest but meaningful incentive for consistent annual giving, even when itemizing is not advantageous. However, this deduction only applies to cash gifts made directly to public charities and not to a Donor Advised Fund (DAF) or private foundations.

2. A new “floor” for itemizers

Itemizers may only deduct charitable contributions that exceed 0.5% of Adjusted Gross Income (AGI). For example, a donor with $300,000 of AGI must give more than $1,500 before any charitable deduction begins. This change creates an incentive for donors to “bunch” multiple years of giving into 2025 to ensure their contributions clear the floor. We provide more details on this strategy below.

3. A new “cap” for top-bracket donors

In 2026, the charitable deduction will be capped at the 35% rate, even for donors in higher brackets. A donor taxed at 37%, for instance, will receive a $35,000 deduction (instead of $37,000) for a $100,000 gift. High-income donors may want to accelerate major gifts into 2025 while higher deduction rates are still available.

Why 2025 Is a Critical Planning Year

Advisors and donors are hearing a consistent message across the industry: accelerate strategic giving in 2025. Schwab, Morningstar and other industry leaders are highlighting this as a critical window to:

• Lock in higher deduction values
• Avoid the new floor on itemized gifts
• Maintain the full value of large charitable contributions
• Pre-fund future giving through a DAF

Beyond financial goals, key findings from our 2025 Nonprofit Survey show nonprofits are feeling the strain of decreased federal funding and rising community needs. This combination of timing, tax advantages and a shifting nonprofit landscape make 2025 a uniquely crucial time to give.

So, here are three useful strategies we encourage considering if donors want to capitalize on this moment.

1. Bunch or front-load giving through a Donor Advised Fund

One attractive option is to accelerate two or more years of charitable gifts into a single year. A Donor Advised Fund is an ideal tool for “bunching” multiple years of charitable gifts into a single year, because it allows you to:

• Maximize 2025 deductions
• Avoid the 0.5% AGI floor
• Gift appreciated assets to avoid capital gains
• Make grants on your timeline

Establishing a DAF at the Community Foundation offers advantages you won’t find through other providers, especially for donors looking to make an impact locally. We provide:

• Access to philanthropic advising
• Local research and issue-area insights
• Personal connections, educational and social events, and site visits to nonprofits
• A vehicle that adapts to your charitable goals over time

2. Consider accelerating major or legacy gifts

For donors in higher tax brackets, accelerating significant gifts tied to a broader estate or retirement strategy in 2025 may preserve the full 37% deduction benefit. Options include:

• Direct gifts to nonprofits
• Contributions to a DAF
• Establishing a Designated or Field of Interest fund
• Advancing bequests or legacy commitments

3. Continue making QCDs from IRAs

Qualified Charitable Distributions (QCDs) remain unchanged and continue to be a powerful tool.

In 2025, donors age 70½ or older may give up to $108,000 directly from an IRA to eligible funds at the Community Foundation, bypassing taxable income and potentially satisfying required minimum distributions.

How the Community Foundation Can Help

At the Community Foundation, we partner with donors and advisors to design giving strategies that support the goals of both those giving and the nonprofits they love. This requires adapting to changing tax environments and serving the needs of southwest Washington for the long term.

Among other things, our team offers:

• Customized philanthropic planning
• Support for gifts of complex or appreciated assets
• Deep knowledge of regional nonprofits
• Stewardship and legacy support

The bottom line: Thoughtful planning in 2025 can turn tax changes into opportunities for those making large gifts and the communities they care about. Whether you’re planning your own giving or advising clients, we will always be here to help create a more flourishing southwest Washington.