Charitable Giving Under the Big Beautiful Bill: What You Need to Know Before 2026
Posted on: July 26, 2025 by Mike Munson, CFA in Tax Strategy
Intro to "Notes from Mike"
As many of you know, I lead the Tax Strategy team at MYeCFO, advising clients on tax planning, QSBS, option strategies, and other ways to legally and ethically minimize taxes.
In recent weeks, many clients have asked about the implications of the new One Big Beautiful Bill Act and how it will impact their planning. I'm sharing this note to highlight key issues we're addressing and provide insight into our approach.
I'll be sending these Notes from Mike periodically to keep you informed and help you navigate important tax strategy opportunities as the law evolves. If you have questions, please reach out to your primary advisor or your tax prep project manager so we can address your specific situation.
Today's Focus: Charitable Giving
The recently enacted Act brings sweeping tax changes beginning in 2026, including new rules for charitable contribution deductions that affect nearly every taxpayer. These changes create both opportunities and challenges, depending on income level and giving strategy.
This note focuses specifically on charitable giving changes, as they require action before year-end 2025 to maximize benefits.
Key Takeaways
- New $2,000 (MFJ) /$1,000 (Single) Deduction – Non-itemizers can claim limited charitable deductions starting in 2026.
- Haircuts for Itemizers – Starting in 2026, itemized charitable deductions will be reduced by 0.5% of AGI, and high-income filers face an additional cap.
- 2025 Is Critical – Front-loading contributions, especially to donor-advised funds (DAFs), can lock in higher deductions before the new limits take effect.
Example: Why Timing Matters
The impact of these changes becomes clearer when we look at a real-world scenario. The timing of your charitable giving can make a significant difference in your tax savings, especially for high-income taxpayers. Let's examine how the new rules would affect a typical high-net-worth family.
Consider a married couple with $900,000 AGI planning to give $100,000:
| Year | AGI | Deduction Allowed | Rate Applied | Tax Savings |
|---|---|---|---|---|
| 2025 | $900,000 | $100,000 | 37% | $37,000 |
| 2026 | $900,000 | $95,500 (after 0.5% haircut) | 35% | $33,425 |
Result: Waiting until 2026 reduces their tax savings by $3,575
What's Changing in 2026?
The new law introduces several significant modifications to charitable deduction rules that will affect taxpayers differently based on their filing status and income level. Understanding these changes is crucial for effective tax planning, as some provisions create new opportunities while others impose new limitations. Let's break down the key modifications:
✅ New Deduction for Non-Itemizers
- Up to $2,000 for married filers ($1,000 for singles)
- Cash gifts only; property or stock does not qualify
- Cannot be used for DAFs or supporting organizations
⚠️ Itemized Deduction Reductions
- 0.5% AGI Disallowance: Reduces charitable deductions by 0.5% of AGI annually
- High-Income Cap: Itemized deduction benefit limited to 35% (vs. 37%) for top bracket taxpayers (currently $752K joint / $626K single and up)
✅ Expanded SALT Deduction—With Limits
- Raised to $40,000 for some taxpayers
- Drops back to $10,000 for those with incomes above $600,000
Strategies Before Year-End 2025
Given the significant changes coming in 2026, proactive planning in 2025 can yield substantial tax savings. The key is to maximize deductions under the current, more favorable rules while positioning yourself for the new landscape. Here are several strategies to consider implementing before the year ends:
🚀 Accelerate Giving
High-income taxpayers should consider front-loading charitable contributions into 2025.
💼 Use Donor-Advised Funds
Contribute now—especially appreciated stock—to secure a 2025 deduction and give over time.
📊 Consider Bunching
If your deductions hover near the standard deduction, bunch gifts into one year to maximize benefit.
🏦 Leverage QCDs
Those 70½+ should consider qualified charitable distributions from IRAs, which avoid the new limitations.
Bottom Line
The new charitable rules under the One Big Beautiful Bill will significantly change how deductions work starting in 2026. Acting now could mean thousands of dollars in tax savings.
We recommend you reach out to your tax advisor or our team to explore how these provisions will impact your charitable giving and whether front-loading donations in 2025 makes sense for your situation.
Over the next few months, we'll publish additional tax strategy notes related to other key changes in the new bill, so stay tuned for further guidance.
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