Recent federal legislation—including the One Big Beautiful Bill Act (OBBBA)—and several tax code changes taking effect in 2026 may significantly impact charitable giving strategies. As you plan your year-end philanthropy, here are the most important updates to know.
Key Tax Provisions & Changes
1. Tax Rates and Standard Deduction
OBBBA permanently extends:
- Current income tax brackets (10% to 37%)
- The increased standard deduction
- The elimination of personal and dependent exemptions
For seniors:
Individuals age 65+ may be eligible for an additional deduction of up to $6,000 for tax years 2025–2028.
2. SALT Deduction Increase in 2025
For tax year 2025, the State and Local Tax (SALT) deduction cap temporarily increases to:
- $40,000 for married couples filing jointly
- Subject to income limits (MAGI below $500,000)
This may make itemizing more beneficial—and could unlock the charitable deduction for some households.
3. Charitable Deductions: New Floor & Ceiling in 2026
Starting in 2026, two new limitations begin:
- New deduction “floor”:
Only the portion of charitable gifts above 0.5% of AGI will be deductible for itemizers. - Deduction “ceiling” for high earners:
For taxpayers in the 37% bracket, the tax value of itemized deductions will be capped at 35%.
Planning note:
If you are considering a large or multi-year gift in 2026 or later, giving before December 31, 2025 helps avoid these reductions.
4. Charitable Deduction for Non-Itemizers (Beginning 2026)
Starting in 2026, those who take the standard deduction may still claim:
- Up to $2,000 for cash charitable gifts (married filing jointly)
- Not applicable to DAF contributions
Year-End Giving Strategies to Consider
1. Donate Appreciated Assets
Gifts of long-term appreciated securities:
- Provide a deduction for the full fair market value
- Avoid capital gains tax
- Can reduce estate size
2. Open or Donate to a Donor-Advised Fund (DAF) at JEWISHcolorado
DAFs provide:
- An immediate tax deduction
- The ability to distribute grants over time
- Facilitates multi-generational giving
- Flexibility to contribute appreciated assets
- Administrative fees support JEWISHcolorado’s mission
DAFs are also helpful for “bunching” multiple years of giving into 2025 to maximize itemized deductions.
3. “Bunching” Charitable Contributions
If your total itemized deductions won’t exceed the 2025 threshold ($31,500 for married couples), you may benefit from:
- Combining two or more years of charitable gifts into 2025
- Itemizing this year and taking the standard deduction next year
This strategy is even more valuable with the 2026 floor and ceiling coming.
4. IRA Qualified Charitable Distributions (QCDs)
For individuals age 70½ or older, QCDs remain a highly tax-efficient strategy.
In 2025, the QCD limits are:
- $108,000 per person
- $216,000 per couple
Benefits:
- Reduce taxable income
- Can satisfy Required Minimum Distributions (RMDs)
- Remove assets from your estate
Note: QCDs cannot be made to DAFs.
Congress also recently expanded QCDs to permit a one-time transfer of up to $53,000 to fund a charitable gift annuity.
5. Annual Gift Tax Exclusion
For 2025, the annual gift tax exclusion is:
- $19,000 per recipient
Gifting assets can reduce both taxable income and future estate tax exposure.
Important Reminder
We are available to discuss charitable giving strategies with you and your advisors. However, we cannot provide legal or tax advice. Please consult with your tax or financial professional to determine what is best for you.