As we enter the final months of 2025 and the holiday season, charitable giving may be on your mind. Generosity tends to spike at year-end because it’s a time when we’re generally thinking of others and have a heightened awareness of needs in the community. In fact, an estimated 30% of annual giving is done in December, with 10% occurring in the last three days of the year.  

While a spirit of goodwill may be the spark that prompts year-end giving, Americans are also motivated by a more practical concern: tax deductions for charitable contributions. For a person to claim tax deductions, charitable contributions must be made before the close of the calendar year to be deductible in that tax year. 

What’s New for Charitable Gifts in 2026 

As a result of the One Big Beautiful Bill Act (OBBBA) signed into law in July 2025, changes to charitable tax deductions are on the horizon for 2026: 

1. Non-itemizing taxpayers who take the standard deduction may now claim a small tax deduction for cash contributions to public charities: up to $1,000 annually for single filers and up to $2,000 annually for those who are married filing jointly. Note: This provision is not available for contributions to donor-advised funds (DAFs) or private foundations.  
2. For taxpayers who itemize on their tax returns, charitable deductions are only allowed on the amount of contributions that exceed 0.5% of Adjusted Gross Income (AGI). 
3. For C corporations, deductions are allowed only on contributions that exceed 1% of taxable income. 
4. For taxpayers in the highest income tax bracket (37%), the value of charitable deductions will be capped at a 35% tax rate. Therefore, a $3,700 deduction on a $10,000 charitable gift, for example, will decrease to $3,500 starting in 2026. 

Being able to take a tax deduction is attractive; however, certain taxpayers may also consider making contributions that will help reduce their gross incomes in addition to, or instead of, generating a potential deduction, such as qualified charitable distributions from IRAs or 401(k)s. 

Charitable Strategies to Consider Before Year-End 

Taxpayers may want to consider “bunching” their charitable contributions into certain years, rather than making contributions every calendar year. “Bunching” means making as many donations (or as large a donation) as possible in one calendar year instead of spreading those donations over multiple years. To take advantage of this technique for 2025 would require a taxpayer to make as many donations as possible before December 31, 2025. Bunching several years’ worth of charitable donations into 2025 would allow the taxpayer to take the full deduction under the pre-2026 rules before the 0.5% AGI floor takes effect.  

Ways to bunch charitable contributions include: 

• Making outright gifts with a large combined value or fewer and larger gifts. Taxpayers may want to consider making several years’ worth of intended gifts to a single charity as a larger gift in one year. 

• Making a large gift to a donor-advised fund (DAF). Using this strategy, the lump-sum contribution can be made (and potentially deductible) in one year but actual distributions to recipient charities can be made later, over many years, according to the taxpayer’s wishes. 

• Making qualified charitable distributions (QCDs). These are qualifying distributions made from a taxpayer’s qualifying tax-deferred retirement account directly to the recipient charity. QCDs can be made by donors aged 70½ and older. A QCD will not be included in the donor’s gross taxable income, but it will count towards the donor’s required minimum distribution (RMD) for the year of the contribution. Since QCDs are not counted in the donor’s taxable income, they do not raise the threshold set by various AGI-based rules. However, because they also do not generate any charitable deduction, they are also ignored in determining whether the taxpayer’s charitable contributions exceed the AGI limitations.  

• Making contributions of qualifying capital gain assets directly to a qualifying public charity. Qualifying capital gain assets are assets that have increased in value since the taxpayer acquired them. Qualifying capital gain assets include many business and investment assets that have been held by the taxpayer for more than one year or that were inherited by the taxpayer, such as stocks, bonds, other securities, real estate, and certain items of tangible personal property like coin collections, jewelry, and professional artwork. When contributed to a qualifying public charity, the taxpayer receives a deduction for the full fair market value of the contributed assets as of the contribution date, while avoiding the capital gain income that the taxpayer would have to have recognized if he or she had sold the assets and contributed cash. 

• Making contributions of qualifying capital gain assets to a charitable remainder trust (CRT). A CRT is a type of trust under which a donor transfers assets to the CRT but retains the right to receive (or have someone else receive) a series of payments from the CRT over a specified period. At the end of the payment period, the charity named as the remainder beneficiary receives the remaining assets. The contribution to the CRT produces a charitable income tax deduction for that year based on the estimated value of the charity’s remainder interest as of the contribution date. For a donor with valuable, highly appreciated assets and strong charitable inclinations, a CRT can be a great way to benefit both the donor and the charity. 

Now’s the time to implement income tax planning strategies before the end of the year. If you would like guidance on how to leave a legacy through charitable giving, the Metro Atlanta-based estate planning attorneys at Morgan & DiSalvo would be pleased to schedule a consultation with you. Please call (678) 720-0750 or email info@morgandisalvo.com.