If you itemize your tax deductions, important changes are coming for tax year 2026 that could affect your tax planning strategy. To keep you informed, we’ve summarized the details about the new floor on charitable deductions and the reduced tax benefits for high-income earners. In addition to the explanation of the new limits, we’ve also provided guidance on how to adjust your planning strategy to reap the most benefit in tax savings.

A new floor on charitable deductions
Charitable giving is motivated by generosity and purpose. But as tax rules evolve, it’s important to make sure your giving strategy aligns with your overall financial plan. With thoughtful planning that considers the new floor on charitable deductions, you can continue supporting the causes you care about while still maximizing available tax benefits.

Starting in 2026, charitable donations will only be deductible if they exceed 0.5% of your Adjusted Gross Income (AGI). The new minimum threshold you must clear before you receive any tax benefit is similar to how medical expenses are only deductible once they exceed a percentage of your income. If your donations don’t exceed that 0.5% threshold, you won’t receive a deduction at all.

For example:
If your AGI is $100,000, 0.5% of that amount is $500. If you donate $5,000 to a charitable organization, you will only be able to deduct $4,500.

The reduced tax benefit for high-income taxpayers
Another significant change that will affect high-income earners is the capped value of itemized deductions at 35%. Beginning in 2026, taxpayers in the top 37% tax bracket will only receive the benefit of itemized deductions as if they were in the 35% bracket.

For example:
If you're in the 37% bracket and have $10,000 in charitable deductions, you will only save $3,500 under the new rules.

This limitation will apply to:

• Single filers and heads of household with taxable income above $640,600
• Married couples filing jointly with taxable income above $768,700
• Married individuals filing separately with taxable income above $384,350 

Planning strategy adjustments for 2026 charitable giving
“Bunch” your donations. Instead of making similar-sized donations every year, you may benefit from combining multiple years of giving into one single year with the “bunching” strategy. Bunching increases the likelihood that your donations exceed the 0.5% AGI floor and produce a larger deduction.

For example:
Rather than donating $20,000 in 2026 and $20,000 in 2027, you might donate $40,000 in 2026.

Use a donor-advised fund (DAF). Make a large contribution to a DAF in one year to receive the immediate tax deduction, and then gradually distribute to charities over time through the DAF. This can be especially helpful in a high-income year when maximizing deductions is a priority.

Donate appreciated assets. Instead of giving cash, consider donating long-term appreciated investments such as stocks. This option lets you avoid capital gains tax on the appreciation, and you’ll receive a deduction for the fair market value of the asset. This can be significantly more tax-efficient than selling the asset and donating the after-tax proceeds.

Consider qualified charitable distributions (QCDs). If you are age 70½ or older, you can donate directly from your IRA to a qualified charity. The new rules allow transfers of up to $105,000 per year. A QCD counts toward your required minimum distribution (RMD), but it doesn’t increase your adjusted gross income (AGI). For many retirees, this approach is more beneficial than taking a deduction because it keeps taxable income lower.