Plan Before the Holiday Rush

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The holiday season has a way of filling our calendars before we have finished the Halloween candy. If charitable giving is part of your year-end plans, now is a good time to make room for a conversation with your advisor.

The One Big Beautiful Bill Act (OBBBA) changed several federal tax rules for charitable contributions beginning in 2026. Those rules already apply to this year’s gifts, making it worth reviewing how you give before sending a check or selling investments. A little preparation can help your generosity go further while keeping your own financial goals on track.

Understand What Changed for 2026

If you take the standard deduction, you can now deduct eligible cash contributions up to $1,000, or $2,000 for married couples filing jointly. Gifts to donor-advised funds and private nonoperating foundations do not qualify for this particular deduction. Remember, a deduction reduces taxable income; it does not reduce your tax bill dollar for dollar.[i]

If you itemize, a new threshold applies: only qualifying charitable contributions above 0.5% of your adjusted gross income (AGI) are deductible. For example, with $300,000 in AGI and $10,000 in qualifying gifts, $8,500 would be potentially deductible, before other applicable limits. The threshold applies to your combined qualifying gifts, rather than separately to each donation.[ii]

For taxpayers in the 37% bracket, another change generally limits the federal tax benefit of itemized deductions to 35% for amounts subject to the limitation. The OBBBA also made permanent the 60%-of-AGI deduction limit for eligible cash gifts to public charities. Your advisor and tax professional can help calculate how these rules work together.[iii]

Consider Giving Investments Instead of Cash

If you own appreciated stock in a taxable account that you have held for more than one year, donating shares directly to a qualified public charity may offer advantages. You generally avoid recognizing the capital gain on the donated shares and may qualify for a deduction based on their fair market value, subject to applicable limits, including the new floor.[iv]

For example, shares worth $20,000 that originally cost $8,000 contain $12,000 of appreciation. Donating those shares directly generally avoids realizing that gain. Selling first and donating the proceeds generally triggers the gain. It’s important to talk with your advisor so you can compare the options and confirm that the charity accepts securities.

Explore Bunching Donations

“Bunching” means combining several years of planned donations into one tax year. This may help your total itemized deductions exceed the standard deduction while reducing how often your giving encounters the annual 0.5% floor.

A donor-advised fund can support this approach. You make an irrevocable contribution, potentially claim a deduction that year, and recommend grants to eligible charities over time. Later grants do not generate another deduction. Fees apply, and contributed assets must remain dedicated to charitable purposes. Compare the potential tax benefit with costs and your need for access to those funds.[v]

Review IRA Giving if You’re Eligible

If you are at least age 70½, a qualified charitable distribution (QCD) allows a direct transfer from an eligible IRA to an eligible charity. The 2026 limit is $111,000 per eligible IRA owner. A qualifying transfer can satisfy all or part of your required minimum distribution, if you have one.[vi]

A QCD generally excludes the transferred amount from taxable income rather than creating a charitable deduction. As a result, the new charitable deduction floor and top-bracket limitation do not reduce that exclusion. You cannot also deduct the same gift, and donor-advised funds cannot receive QCDs. Discuss this option before taking an IRA withdrawal yourself.[vii]

Give Yourself Time

Your advisor is here to help you compare your giving options alongside your cash needs, portfolio, retirement income, and expected taxes. Reach out now if you anticipate a large bonus, business sale, or Roth conversion, or if you want to donate real estate or business interests. Complex gifts can require additional review, appraisals, and coordination with your tax and legal professionals.

For gifts intended for the 2026 tax year, plan ahead well before the end of the year and confirm the completion requirements for your chosen method. Custodians and charities may have earlier processing deadlines. Verify the recipient’s eligibility and keep the required records, including written acknowledgments for gifts of $250 or more. Starting a transfer is not the same as completing a gift.

Start with the causes you care about and an amount you can comfortably give. Then let your Larson advisor know what you would like to accomplish so you can evaluate the options together. Reaching out now gives your team time to put a thoughtful plan in motion before the holiday calendar takes over.

[i] https://www.irs.gov/taxtopics/tc506

[ii] https://www.irs.gov/publications/p505

[iii] https://www.fidelity.com/learning-center/wealth-management-insights/charitable-giving-tax-changes

[iv] https://www.fidelitycharitable.org/giving-account/what-you-can-donate/donating-stock-to-charity.html

[v] https://www.fidelitycharitable.org/guidance/philanthropy/what-is-a-donor-advised-fund.html

[vi] https://www.irs.gov/publications/p590b

[vii] https://www.fidelitycharitable.org/content/dam/fc-public/docs/advisors/charitable-planning-guide.pdf