DONATIONS TO CHARITY
What’s new: Starting in tax year 2026, taxpayers who take the standard deduction still can get a tax break for
giving $1,000 (individuals) and $2,000 (married filing jointly) to qualified charities. But two other provisions will impose new limits on itemized charitable deductions for high-income donors… The OBBBA disallows a portion of the itemized deduction equal to 0.5% of a filer’s AGI (adjusted gross income). Example: A filer with an AGI of $300,000 would get no deduction for the first $1,500 of donations. Your tax benefits for charitable deductions are capped at 35%, even if you are in the top marginal tax bracket of 37%. What to do: Consider “bunching”— giving multiple years’ worth of contributions in a single tax year—to maximize the tax benefits for charitable giving. Those who take the standard deduction should consider delaying donations until 2026, when they can take the newly available deduction. High-income donors who itemize should consider accelerating donations into 2025, to avoid disallowances and caps. For more on the rules for charitable giving.