Giving Smarter Under the 2026 Charitable Rules

The same gift can now be worth noticeably less, or noticeably more, depending on when you give it, what you give and how it's arranged.

Most generous households give the same way every year: a check in December, a few online gifts, a pledge to a school or congregation. The habit is admirable. As a tax matter, it has become less efficient. Beginning in 2026, federal law changed how charitable gifts are deducted, and the changes reward giving that is planned rather than routine.

Key points

• Itemizers can deduct only gifts above 0.5% of AGI. At $400,000 of AGI, the first $2,000 of giving produces no deduction.

• In the 37% bracket, the benefit of itemized deductions, including gifts, is capped at 35 cents per dollar.

• Non-itemizers can deduct up to $1,000 of cash gifts ($2,000 joint), though not gifts to donor-advised funds.

• Bunching several years of gifts into one year, often through a donor-advised fund, pays the floor once instead of every year.

• Appreciated stock held over a year is usually a better gift than cash.

What changed

A floor for itemizers. If you itemize, the first 0.5% of your adjusted gross income in charitable gifts is no longer deductible. That floor applies every year you itemize.

A cap for the top bracket. For households in the 37% federal bracket (2026 taxable income above $768,700 for joint filers, $640,600 for single filers), the tax benefit of itemized deductions is limited to 35 cents per dollar. Most households earning $250,000 to $600,000 aren't affected by this cap.

A new deduction for non-itemizers. If you take the standard deduction, you can now deduct up to $1,000 of cash gifts ($2,000 for joint filers) to operating charities.

Why routine giving now costs more

The floor works like a deductible on an insurance policy, charged once a year. A household that gives $10,000 every year on $400,000 of AGI loses the deduction on $2,000 of it, every year. Over five years, that's $10,000 of giving that produced no tax benefit. The same household could give the same total in a different pattern and pay the floor once instead of five times.

Pattern over five years	Total given	Amount below the floor
$10,000 every year	$50,000	$10,000 (five floors of $2,000)
$50,000 in year one through a donor-advised fund	$50,000	$2,000 (one floor)

Illustration assumes $400,000 of AGI in each year.

Bunching, and the donor-advised fund

Bunching means concentrating several years of planned giving into one tax year, itemizing that year, and giving less, or nothing, from your own account in the years between.

A donor-advised fund makes this practical. You contribute to the fund in the year you choose, take the deduction that year, and then recommend grants to your charities on your usual schedule. The charities see no change. Your return sees one large deduction in a year you picked, rather than smaller ones each eroded by the floor.

The best year to bunch is usually a high-income year: a year with a large bonus, a stock sale, an option exercise or a business sale. A deduction is worth the most in the year your marginal rate is highest.

Give stock, not cash

If you own stock or fund shares held for more than a year that have grown in value, giving the shares instead of cash is often the single most valuable change you can make. You generally deduct the full market value and never pay tax on the gain. In California, where capital gains are taxed as ordinary income, the avoided state tax alone can be substantial.

Two cautions. Shares that have lost value should usually be sold first, so you can claim the loss, and the cash given. And deductions for appreciated property are limited to 30% of AGI for gifts to most public charities (60% for cash), with any excess carried forward for five years.

The gift you give is your decision. The year it lands in, the asset you give and the vehicle you give through are tax decisions, and since 2026 they matter more.

If you're 70½ or older

A qualified charitable distribution sends money directly from your IRA to a charity. It isn't included in your income at all, so the floor and the cap don't touch it, and it can count toward required minimum distributions. For older donors, it's usually the most efficient way to give.

California is separate

California doesn't follow every federal change, and its itemized deduction has its own rules. A plan that works federally should be checked against your California return before you act on it.

The engineer and the chess player

The engineer's work here is exact: the 0.5% floor, the 35% cap, the percentage-of-AGI limits and the carryforward rules. The chess player's work is placement. A gift bunched into the same year as a bonus or a stock sale is worth more than the same gift spread thinly across ordinary years. Giving appreciated shares from a concentrated position can reduce that position and the tax on it at the same time. Those decisions only become visible when giving is planned alongside the rest of the year, not after it.

Records

For any gift of $250 or more, you need a written acknowledgment from the charity, received by the time you file. Gifts of property over $500 require additional reporting, and most gifts of property over $5,000, other than publicly traded stock, require a qualified appraisal.

What to take from this

A short conversation before you write the next check, ideally as part of a multi-year projection, is how a generous household makes sure its generosity is also efficient.

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Discuss your situation with Natalie C. Papagni, CPA

If you give every year and want your generosity to be efficient as well, a conversation before the next gift, ideally as part of a multi-year projection, is the natural first step. A complimentary 30-minute consultation is a good place to start.

Natalie C. Papagni, CPA — Tax, Planning & Advisory Services 4275 Executive Square, Suite 200, La Jolla, CA 92037 (858) 754-8277 | service@lajollataxcpa.com | lajollataxcpa.com

Disclaimer: This material is provided for general educational purposes only. It is not tax, legal or accounting advice, and it does not create a CPA–client relationship. Tax outcomes depend on individual facts and circumstances, and figures and rules change from year to year. Consult a qualified professional about your specific situation before acting. Figures reflect 2026 federal rules.