On Giving Tuesday, here’s what to know about how the charitable deduction will change next year – and how professionals are advising their high-net worth clients on donation strategies.
The One Big Beautiful Bill Act (OBBB) made several changes to the charitable deduction, including establishing a permanent and expanded deduction for non-itemizing taxpayers. But for individuals who itemize, the OBBB added new limitations, effective in 2026.
Changes for Individual Itemizers
Among the changes for individual itemizers is a new deduction floor of 0.5% of adjusted gross income (AGI). The Tax Foundation’s Emily Kraschel and Erica York break down this change in simple terms: beginning in 2026, an itemizer with $200,000 in AGI cannot deduct the first $1,000 of their charitable giving. Or for a taxpayer with $1 million in AGI, explained Evercore Wealth Management’s Justin Miller, the first $5,000 is not deductible.
“Hopefully that doesn’t change behavior for someone making over a million dollars who’s giving to charity, but it is a haircut,” Miller added, speaking at the American Institute of CPAs National Tax Conference last month.
Another change for individual itemizers in the highest tax bracket is a limitation on the value of deductions to 35 cents per dollar, rather than 37 cents. This change applies in 2026 to all itemized deductions, Miller explained. It means that while “you might pay taxes at 37%, you only get a 35% deduction for those deductions,” he added.
Taxpayers in this highest bracket calculate income by adding itemized deductions to AGI, explain Kraschel and York. They then must reduce their itemized deductions by 2/37th of their deduction value or their income exceeding the 37% tax bracket, the Tax Foundation authors add. Miller described the new provisions as “sort of a new version of the Pease limitation.”
But there’s also some “good news” for individual itemizers, said Miller – the OBBB made permanent the “60% AGI limitation for people giving cash to charity.” He clarified that for taxpayers giving a mix of donations, such as appreciated securities and cash, the 50% AGI limitation applies to the cash donation. “But if you’re giving all cash, at least you can give 60%,” he added.
Planning Strategies
EY’s Damien Martin offered a few strategies for individual itemizer charitable giving in 2025 and beyond. “Now that we have these limitations” beginning in 2026, Martin told Checkpoint, “we’re in this particularly interesting time where you get an opportunity easily to do something when the limitations just don’t apply.” That means working with clients to ensure they understand how things will change after December 31, 2025.
“All things being equal – income and the amount that you’re giving – you’re generally going to be better off from a tax deduction standpoint to make that donation in 2025,” said Martin. Taxpayers also may want to accelerate their giving, said Martin. So, if a taxpayer typically gives $10,000 per year, they may want to contribute $30,000 before the end of this year.
However, Martin noted that some people don’t want to give a larger amount in 2025 and prefer to continue with annual donations. For these taxpayers, said Martin, a donor advised fund can allow them to “bunch” their donations for charitable deduction purposes but pass that money along to a charity on an annual basis.
Advisors can help clients with planning by asking open-ended questions about their charitable goals, Miller elaborated. He suggests asking not only what assets clients are considering for charitable giving, but also whether they’ve documented their charitable goals. Another important question this year is how “uncertainty in the current environment” is impacting their giving, Miller added.
Year-End Scramble
With just weeks before the new OBBB charitable deduction provisions go into effect, Martin said that “it could become a scramble, particularly as more days start to clip off the calendar.” He’s heard from advisors who are expecting to “get a bunch of phone calls” in the “last two weeks of the year.”
But the year-end crunch is not so unusual, said Martin. “People tend to be more philanthropic, and there’s giving at the end of the year.”
For taxpayers who want to newly use a donor advised fund before year end, Martin said “it’s actually incredibly easy” to get started. Taxpayers can “go online” and “have one set up in 15 minutes,” he said.
But for those who want a third-party financial advisor to advise the fund, “I think it takes an extra couple of days,” said Martin, to allow for authorizations. And working with an advisor can be helpful, he added, to determine donation amount, timing, and type.
Either way, Martin suggests taking action now given how close we are to the end of the year. “I would not recommend waiting,” he stressed. While transferring cash will be fast, Martin added that other donations such as appreciated securities require a longer “runway.”
Miller urged an even faster timeline, suggesting 2025 charitable donations be nailed down by the end of the first week of December. “You can’t do this at the end of the year, especially if we’re using appreciated stock, let alone trying to create a donor advised fund,” said Miller. “Getting the stock” and transferring accounts “does take time,” he added.
Miller’s advice to tax professionals and advisors: “Call your clients, email them, wish them a happy holiday, and say, ‘Get your charitable deductions in this year.'”
For more on charitable deductions, see Checkpoint’s Federal Tax Coordinator 2d ¶ K-2800.
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