Are you planning to make a difference with your charitable gifts in the coming year? Major changes to federal tax law are on the horizon, and they could significantly impact how—and how much—you can deduct for your generosity. Starting in 2026, new limits on charitable deductions will make it harder to maximize your tax benefits, but there’s still time to act. By planning your giving strategy now, you can take full advantage of the favorable rules in 2025, creating greater impact for the causes you care about while also making the most of your tax situation. Read on to discover how you can make your philanthropy go further before these changes take effect.
2025: Eligibility for Larger Deductions (Especially if Itemizing)
Under current rules for 2025, if you itemize deductions, charitable contributions to qualified public charities are still deductible up to established percentage limits of your adjusted gross income (AGI). For example, cash gifts (including to donor-advised funds, or DAFs) are deductible up to 60% of AGI.
Additionally, due to changes under the One Big Beautiful Bill Act (OBBBA), your deduction for state and local taxes (SALT) is temporarily much higher. This may make itemizing more appealing in 2025 than in recent years.
For those already making meaningful charitable contributions, 2025 may provide some of the most favorable tax-benefit conditions in the near future.
2026: New Limits on Itemizers
Starting in 2026, several important constraints will go into effect.
Charitable deductions for itemizers will only apply to amounts above a 0.5% AGI “floor.” Small or occasional donations may no longer be deductible. For example, if a taxpayer’s AGI is $200,000, the 0.5% floor is $1,000 ($200,000 × 0.005). If the taxpayer makes $5,000 in charitable contributions, only $4,000 (the amount above the $1,000 floor) is potentially deductible in the current year.
For high-income donors (in the top tax bracket), the effective deduction rate declines. The maximum tax benefit per dollar donated drops to approximately 35%, down from about 37% previously. For example, a $100,000 gift that would have saved $37,000 in 2025 will now save $35,000 in 2026.
The new law also introduces a flat charitable deduction for non-itemizers. Starting in 2026, single filers can deduct up to $1,000, and married couples can deduct up to $2,000, even if they do not itemize. This change makes small to moderate giving more tax-friendly for many Americans. However, the deduction is modest, and some types of gifts (such as donor-advised funds and private foundations) are excluded from this benefit.
What This Means for Your Giving Strategy
If you plan to itemize and are considering larger charitable gifts, making donations in 2025 is likely more advantageous than waiting until 2026.
If you usually take the standard deduction (don’t itemize), then making moderate donations in 2026 becomes more appealing — but the tax break will remain limited (to $1,000/$2,000).
In 2025, individuals can give up to $108,000 (or $216,000 per couple) through Qualified Charitable Distributions (QCDs). These gifts are tax-free transfers, so they do not count as taxable income. QCDs can also satisfy all or part of an individual’s Required Minimum Distribution (RMD). Timing is essential: donors must be at least 70½ years old on the date of the distribution for it to qualify.
For high earners or those giving mixed-asset or large gifts, 2025 offers a window to maximize deduction benefits before the 0.5% floor and reduced deduction rate takes effect in 2026.
Consider a bunching strategy: give more, deduct more. Donors who itemize can “bunch” several years’ worth of donations into 2025. By contributing a larger sum to a DAF, they can:
- Maximize deductions under 2025’s favorable rules
- Avoid the 2026 AGI floor and deduction cap
- Recommend grants over several years from the DAF to charities like Westminster College.
Given these upcoming changes, 2025 is a critical year to consult with your tax and financial advisors and consider making larger charitable commitments before the new rules take effect. If you haven’t already, think about including philanthropic donations as part of your tax strategy for this year and beyond. This is an excellent opportunity to save while giving and to support organizations like Westminster College through your generosity.
