As charitable giving continues to evolve, donors face a shifting landscape shaped by updated tax regulations and new incentives.
Beginning in 2026, several changes will affect how individuals can deduct and structure their contributions. Whether you’re a seasoned philanthropist or a first-time donor, understanding the strengths and limitations of each giving method is essential to maximizing your impact.
Direct giving—through cash, checks, or credit card donations—has long been the most straightforward way to support charities. In 2025, donors can deduct up to 60% of AGI for cash gifts. Beginning in 2026, a new universal charitable deduction allows non-itemizers to deduct up to $1,000 (individuals) or $2,000 (joint filers) for cash donations to public charities, even without itemizing (does not apply to DAFs or Private Foundations).
For itemizers, deductions will only apply if total giving exceeds 0.5% of AGI. This change may encourage more consistent and meaningful contributions, while still rewarding everyday generosity.
Donor-Advised Funds (DAFs) remain a popular choice for donors who want flexibility and long-term planning. Contributions to DAFs are eligible for immediate tax deductions—up to 60% of adjusted gross income (AGI) for cash and 30% for appreciated assets in 2025. However, starting in 2026, deductions for DAF contributions will only be available to itemizers and must exceed a minimum threshold of 0.5% of AGI to qualify.
For taxpayers who don’t itemize, there is a lost deduction opportunity: Since only itemizers can deduct DAF contributions in 2026, those taking the standard deduction will not receive a tax benefit for a DAF contribution. With higher standard deductions, contributions need to be significantly higher in a tax year—combined with other common itemized deductions such as real estate taxes, mortgage interest, and medical expenses (over 7.5% of AGI)—to gain any tax benefit beyond the standard deduction.
DAFs allow donors to grow their contributions tax-free and recommend grants to qualified charities over time. They also offer anonymity and succession planning, making them ideal for those who want to build a legacy while maintaining control.
Qualified Charitable Distributions (QCDs) allow individuals aged 70.5 and older to donate directly from their IRAs to qualified public charities, excluding the amount from taxable income. To qualify, the transfer must be made directly from the IRA custodian to the charity. In 2025, the annual QCD limit is $108,000 per person, increasing to $115,000 in 2026, with future limits indexed for inflation. Married couples may each contribute from their own IRAs, allowing for combined gifts of up to $216,000 in 2025 or $230,000 in 2026. QCDs count toward required minimum distributions (RMDs) and help reduce adjusted gross income (AGI).
Important to note: QCDs can only be made from a traditional IRA—not from a 401(k), 403(b), or other employer-sponsored retirement plans. To effectively offset your taxable Required Minimum Distribution (RMD), QCDs must be made before your full RMD has been satisfied for the tax year. If you make a QCD after taking your full RMD, it will not reduce the taxability of that distribution. Coordinating QCDs with RMDs is essential to help ensure you receive the intended tax benefit
Unlike other charitable strategies, QCDs benefit both itemizers and non-itemizers by offering a direct reduction in taxable income without requiring a Schedule A deduction. Additionally, donors may make a one-time QCD of up to $54,000 in 2025 to fund a split-interest entity such as a charitable remainder trust (CRT) or charitable gift annuity (CGA). These vehicles provide lifetime income to the donor or another beneficiary, with the remainder going to charity. As of this writing, the 2026 limit on a one-time QCD to a split-interest entity has not been finalized.
While QCDs must go directly to public charities and cannot be made to donor-advised funds or private foundations, they can be powerful tool for retirees seeking impact and income efficiency.
Charitable trusts, including Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs), offer a way to support charities while also providing income to donors or heirs. These trusts are especially useful for integrating philanthropy with estate planning, allowing donors to reduce estate taxes and manage wealth transfer.
Although the basic structure of charitable trusts remains unchanged, new deduction rules starting in 2026 mean that only itemizers who exceed the 0.5% AGI threshold will benefit from associated tax breaks. Trusts continue to require legal setup and ongoing management, but they remain a powerful tool for donors with complex financial needs.
Private foundations offer donors the ability to manage investments, hire staff, and make grants to a wide range of recipients—including individuals and international organizations. In 2025, donors can deduct up to 30% of AGI for cash gifts and 20% for appreciated assets. From 2026 onward, deductions will only apply for those who itemize, and the total charitable giving must exceed 0.5% of AGI. Unlike Donor-Advised Fund (DAF) contributions, private foundations can generally only deduct the cost basis of a donated asset—that is, the original purchase price—if the property is not publicly traded stock.
While foundations require more administrative effort and public disclosure, they may provide unmatched control and customization for high-net-worth individuals and families.
With new rules taking effect in 2026, 2025 presents a final opportunity to take full advantage of existing deduction limits. Important to note that beginning in 2026, the maximum tax benefit for charitable deductions will be capped at 35%, even for taxpayers in higher brackets. This cap applies across all giving strategies.
Whether you’re looking for simplicity, control, or legacy-building, understanding how each giving method fits into the updated tax framework can help you make the most of your charitable impact.
Navigating charitable giving can be complex. Be sure to consult your financial advisor and tax professional to create a strategy tailored to your unique situation.
Sources:
The National Law Review: New Limitations on Charitable Deductions Take Effect in 2026
Fidelity Charitable: One Big Beautiful Bill (OBBB) Impact on Charitable Giving
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