The charitable giving landscape will be changing in January 2026 as a result of the One Big Beautiful Bill Act. As a partner in strategic generosity, we want to make sure Community Foundation donors are aware of these changes so that they can make informed decisions about their philanthropy.
What’s Changing in 2026?
- New Deduction Floor: Historically, taxpayers who itemize their deductions could count all charitable donations against their taxes. Starting in 2026, there will be a new threshold for charitable giving. Donations up to one-half of one percent (0.5%) of a donor’s Adjusted Gross Income (AGI) will no longer count toward the itemized deduction. For some donors, the loss of a portion of this deduction may result in significant additional taxes next year.
- Top-End Limit: Taxpayers in the highest tax bracket will face a cap on the value of their deductions, which decreases the tax benefits of those charitable donations.
The Solution: Bunching with a Donor Advised Fund
To avoid these “haircuts,” many donors are choosing to strategically “bunch” their donations before the end of 2025 by prefunding their future charitable donations into a Donor Advised Fund (DAF). This solution will allow these donors to get the full tax benefits this year but give their money away over time.
How it works:
- Maximize 2025 Deduction: Donors could recognize a tax deduction for the entire contribution this year.
Future Giving: The funds within the DAF would be invested, where they grow tax-free; then, you can recommend grants from your fund over time, A Donor Advised Fund can be a great way to give now and decide later.
- Next Steps: Talk to Your Advisor
The details of the 2026 tax changes and the optimal strategy for “bunching” depend entirely on your individual financial profile. We are not tax advisors, and we cannot provide specific tax advice.
Now is a great time to schedule a conversation with your tax, legal, and financial advisors and to determine the strategy that will work best for you. The Community Foundation staff stands ready to provide information and to implement your giving strategy. We are honored to help donors simplify their giving and amplify their impact, and we would love to help you as well!
