By JACKSON KEENAN, CFP®
In a recent blog, I explored charitable giving strategies and how they impact your taxes. For this installment, I would like to review two large tax changes coming in 2026.
A quick reminder of the 2025 rules:
Currently, the IRS sets limits on how much of your charitable giving you can deduct based on your Adjusted Gross Income (or AGI). The limits vary depending on the type of gift and whether the charity is public or private.
| Type of Gift | Public Charity | Private Charity |
| Cash | 60% | 30% |
| Ordinary Income Property | 50% | 30% |
| Capital Gain Property | 30% | 20% |
Many of our clients in the top marginal tax bracket (currently 37%) use these deductions to lessen their tax burden. The new tax act passed in July 2025 has made this a little more complex.
1. New floor on charitable deductions for itemizers.
Beginning with the 2026 tax year, itemizers will only be able to deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI).
Example: If your AGI was $750,000, you could only deduct contributions above $3,750. Meaning, donations at and under $3,750 have no tax advantage.
2. New limits for high-income itemizers.
Next, starting in 2026, the tax benefit of itemized charitable deductions will be capped at 35% for taxpayers in the top (currently 37%) marginal bracket.
Fortunately, you can carry over any contributions you cannot deduct in the current year because they exceed the limits based on your AGI. Except for qualified conservation contributions, you may be able to deduct the excess in each of the next 5 years until it is used up, but not beyond that time.
A planning recommendation:
Donors in higher tax brackets who itemize may want to think about accelerating their gifts in 2025 to maximize their deduction under the current tax law before the new cap goes into effect. We also encourage you to consult your CPA to confirm that your charitable giving and tax strategies are structured in the most effective way.
Citations:
IRS Publication 526 Charitable Contributions, H.R.1 – One Big Beautiful Bill Act
Disclosure:
The information provided is for illustration purposes only. It is not, and should not, be regarded as “investment advice” or as a “recommendation” regarding a course of action to be taken. These analyses have been produced using data provided by third parties and/or public sources. While the information is believed to be reliable, its accuracy cannot be guaranteed. MONTAG employees do not provide legal or tax advice. For specific legal or tax matters, you should consult with your own legal and/or tax advisors. There are risks associated with investing in securities. Investing in stocks, bonds, exchange traded funds, mutual funds, and money market funds involve risk of loss. Loss of principal is possible.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
