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2026 Tax Law Changes: What Donors Need to Know

2026 Tax Law Changes: What Donors Need to Know

As you consider your charitable giving this year, it’s important to be aware of upcoming changes to U.S. tax law that may affect your strategy. Starting January 1, 2026, new rules will impact how charitable gifts are deducted—whether you itemize or take the standard deduction. This brief guide outlines key updates and offers tips to help you make the most of your generosity.

Key Changes

  1. New Universal Charitable Deduction
    Starting in 2026, taxpayers who take the standard deduction will be able to deduct charitable gifts up to:
    • $1,000 for single filers
    • $2,000 for married couples filing jointly
    Note: Gifts to donor-advised funds do not qualify.
     
  2. AGI Floor for Itemizers
    If you itemize deductions, charitable contributions will only be deductible to the extent they exceed 0.5% of your adjusted gross income (AGI).
    Example: With an AGI of $200,000, only gifts above $1,000 would be deductible.
     
  3. Deduction Cap for High-Income Donors
    Taxpayers in the highest income bracket (37%) will face a 35% cap on total itemized deductions.
     
  4. Corporate Deductions
    Companies can still deduct charitable gifts, but only larger ones above a small percentage of income (exceeding 1% of AGI).

Giving Strategies to Consider

  • Qualified Charitable Distributions (QCDs):
    Donors aged 70½+ can give up to $108,000 annually from IRAs directly to qualified nonprofits—reducing taxable income and satisfying RMDs.
     
  • “Bunching” Gifts with a Donor-Advised Fund (DAF):
    Consider combining multiple years of giving into 2025 to maximize deductions under current rules. You can then distribute grants over time.

What It Means

These changes make generosity more rewarding. Whether you’re a first-time donor or a longtime supporter, your contributions will continue to make a difference—and may now come with extra tax benefits.

Note: This information is not intended to be tax or legal advice. We encourage you to speak with your financial or tax advisor to determine the best approach for your situation. While MCN does not provide tax or legal advice, we’re happy to support your philanthropic planning.