The CARES Act provides four temporary options for tax-deductible charitable giving in 2021. Here's a list of strategies you might want to consider in your…
Who’s Affected?
Individuals who itemize deductions. If you take the standard deduction, this change doesn’t affect you.
What’s changing in 2026?
A provision in the recently passed One Big Beautiful Bill Act (OBBBA) will reduce your charitable deduction by 0.5% of your AGI (not 0.5% of the gift). In 2025, there’s no haircut on your charitable deduction.
AGI |
2025 Deduction |
2026 Deduction(Gift – 0.5% x AGI) |
Difference |
|---|---|---|---|
| $100,000 | $10,000 | $9,500 | $500 |
| $200,000 | $10,000 | $9,000 | $1,000 |
| $400,000 | $10,000 | $8,000 | $2,000 |
| $1,000,000 | $10,000 | $5,000 | $5,000 |
How to estimate your tax savings:
Take the difference between the 2025 and 2026 deductions (from the table) and multiply it by your marginal tax rate. Tax rates range from 10% to $37%, so knowing your rate is key when deciding whether to accelerate gifts into 2025.
What you can do now:
If you plan to give in 2026 anyway, consider making those gifts in 2025.
If your giving varies, consider “bunching” 2026-2027 gifts into 2025 (a donor-advised fund can help).
If you are over 70 1/2 and are taking minimum distributions from your IRA(s), consider a qualified charitable distribution (QCD) from your IRA. This reduces the amount of your taxable IRA distribution by the amount of the gift and is not subject to the .5% of AGI reduction. An added benefit might be allowing you to claim the standard deduction while reducing your AGI by the amount of the QCD at the same time.
Important: If you’re considering a large 2025 gift, talk to your tax preparer first. A big deduction could drop you into a lower tax bracket, which may reduce or eliminate the expected benefit of accelerating the gift into 2025 versus spreading it over multiple years.
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