Turn Generosity into Strategy: Planning for Impactful Year-End Giving

by Alex Freedman, Senior Wealth Advisor

As the holidays draw near, many families start thinking about how—and where—they want to give back.

With the passage of the One Big Beautiful Bill Act (OBBBA), several tax benefits from the Tax Cuts and Jobs Act of 2017 remain in place—along with a few new rules that may affect charitable strategies for high-income donors.

This guide unpacks the updates, what this means for your year-end giving, and how donor-advised funds can help you turn generosity into lasting impact.

Key Takeaways

• For 2026, itemized charitable deductions are capped at 35% for top tax brackets and a new 0.5% AFI floor will apply for charitable deuctions.¹
• If you’re in a higher tax bracket, you may want to accelerate larger donations or claim more itemized deductions before the end of 2025.
• A Donor-Advised Fund offers a flexible, tax-efficient way to give—providing an immediate deduction, potential capital gains savings, and the opportunity to build a lasting charitable legacy

What Key Changes Should I Be Aware of?

As we approach 2026, a couple of important provisions may affect how help balance meaningful charitable giving with tax-efficiency. This includes:

1. Itemized Deductions Capped at 35% for Top Earners

Beginning in 2026, individuals in the highest marginal tax bracket (37%) will see their itemized deductions—including charitable gifts—capped at 35%.¹

Example: If you make a $200,000 charitable contribution this year, it would generate a $74,000 tax benefit; while the same gift would reduce taxes by only $70,000 in 2026.

Note: In 2025, the top 37% tax bracket kicks in at $626,351 for single filers and $751,601 for couples filing jointly.¹ The 2026 numbers aren’t out yet, but you can expect them to creep up slightly with inflation.

2. New 0.5% AGI Floor on Charitable Deductions

Also starting next year, a 0.5% adjusted gross income (AGI) floor will apply before the standard percentage limits for charitable deductions.¹  This effectively reduces the deductible value of charitable contributions for high earners, particularly those making smaller gifts relative to their income.

Example: For a donor with an AGI of $1 million, the first $5,000 of charitable giving would not be deductible.A $100,000 gift of appreciated assets would therefore yield a $95,000 deduction—subject to the 30% AGI limit for such gifts.²

How Should These Changes Affect My Planning?

If you’re in a higher tax bracket, you may want to accelerate larger donations or claim more itemized deductions before the year’s end. You can also revisit your charitable plan with your advisor and explore gifting strategies such as:

Establishing or funding a charitable remainder trust (CRT), legacy income trust (LIT), or donor-advised fund (DAF).

“Bunching” multiple years of charitable gifts into a single tax year to maximize itemized deductions in 2025 if they would otherwise fall below the standard deduction.

Making a qualified charitable distribution (QCD) from an IRA if you’re over 70½, which can be used satisfy your required minimum distributions (RMD).

Why Consider a Donor-Advised Fund?

A Donor-Advised Fund (DAF) offers a flexible, convenient way to support the causes you care about—on your own timeline. You can contribute whenever it makes sense for you and recommend grants to your favorite charities over time. Key benefits include⁴:

• Immediate tax deductions for contributions to your DAF
• Potentially avoiding capital gains taxes when donating complex assets
• Building a family legacy of giving that can span generations
• Supporting multiple causes from a single charitable account
• Making grants anonymously, if privacy matters to you

What Can I Contribute to a DAF?

With donor advised funds, you’re not limited to donating cash—you can also contribute securities, mutual funds, real estate, life insurance policies, and even interests in trusts or privately-held businesses.

A DAF can be especially valuable if you:

• Have recently realized a large gain—such as from appreciated stock, a real estate sale, or the sale of a business interest.
• Want to make a substantial charitable gift now but prefer to distribute funds to charities gradually over time.
• Are looking to donate non-cash assets in a tax-efficient way, avoiding capital gains while maximizing your charitable impact.

Note: Depending on your income, your long-term capital gains rate is typically 15% or 20%.³ By donating appreciated securities (held for at least a year) directly to your DAF,  you can generally avoid capital gains tax and claim a deduction for their fair market value.

What Charities Can I Support?

There are 1.5 million registered 501(c)(3) charities in the U.S., so there’s no shortage of great causes to support.⁵

We’re proud to share the impact our clients are making: with $1.4 million in Donor-Advised Funds, they’ve granted approximately $300,000 to 97 charities over the past year. Their generosity supports:

How Do I Get Started?

We can help you take a closer look at your current financial picture and create a tailored year-end giving plan that accounts for the latest OBBBA provisions, leverages donor-advised funds, and maximizes your impact in a tax-smart way.

Let’s explore the values, causes, and organizations that matter most to you, so your generosity leaves a lasting mark.

Sources
¹ https://www.uscharitablegifttrust.org
² https://www.irs.gov/pub/irs-pdf/p526.pdf
³ https://www.irs.gov/taxtopics/tc409
⁴https://www.renaissancecharitable.org/
⁵ https://www.dafgiving360.org/explore-charities