What’s changed, what hasn’t, and
what it means for your 2026–2027 tax planning.
The Big Beautiful Bill (OBBB) updated the charitable giving rules—but not in sweeping ways. Whether you give a little or give six figures, there’s something here for you. Below is a quick-scan guide by income level, with special notes on Donor-Advised Funds (DAFs) and Qualified Charitable Distributions (QCDs).
- Non-Itemizers
Starting in 2026, you can take a new above-the-line deduction for cash gifts to public charities—even if you don’t itemize:
- $1,000 for single filers
- $2,000 for married filing jointly
Doesn’t qualify: Gifts to Donor Advised Funds (DAFs), private foundations, or non-cash contributions. These limits are fixed and not indexed for inflation.
I will discuss Donor Advised Funds more in this newsletter.
Bottom line: Keep giving—now you can also shave up to $2,000 off taxable income.
- Moderate-Income Itemizers (AGI under $250,000)
AGI (Adjusted Gross Income) is the IRS’s version of income. It’s used for taxes, student aid, insurance, loans, and more—but it’s not always a full or accurate picture of your finances. The AGI acronym pops up everywhere.
Under OBBB, a new “floor” applies: the first 0.5% of your AGI in charitable giving gets ignored. Example: With $200,000 AGI, the first $1,000 of donations gets no deduction.
- Cash gifts still deductible up to 60% of AGI
- Appreciated assets deductible up to 30%
Strategy tip: If the floor or standard deduction wipes out your deduction, consider bunching two years of giving into one.
- Upper-Middle Itemizers (AGI $250,000–$750,000)
Same 0.5% AGI floor, just higher dollar impact. A $500,000 AGI household loses the first $2,500 of charitable deductions.
- 60%/30% caps still apply
- Phaseouts start to creep in
- Timing large gifts around stock sales or business income can help recover lost deductions
- High-Income Donors (AGI over $750,000)
The rules get sharper as income climbs:
- 0.5% floor still applies (AGI $1.2M → $6,000 ignored)
- Cash and appreciated asset caps unchanged (60%/30%)
- New wrinkle: deductions capped at 35% tax savings, even if you’re in the 37% bracket
A $100,000 gift saves $35,000 in tax, not $37,000.
Strategy tip: Accelerate large gifts into 2025 to lock in the full 37% benefit.
🏛 Donor-Advised Funds (DAFs): Still Useful—With Limits
Many clients use a DAF at the National Christian Foundation or similar. The core benefits haven’t changed:
- Immediate deduction
- Flexible grant timing
- Easy record-keeping
What’s new under OBBB:
- Above-the-line deduction doesn’t apply to DAF gifts
- If you contribute to a DAF, you’re excluded from the $1,000/$2,000 deduction
- Treasury has been instructed to propose new rules for large DAFs and big contributions (expected in 2026)
Takeaways:
- Moderate donors can still use DAFs to bunch gifts into one year and spread grants out
- Higher earners should time DAF contributions to high-income years
- Stay flexible—we’ll revisit this as new rules emerge
🏆 Qualified Charitable Distributions (QCDs): Still the MVP
QCDs remain untouched—and still excellent:
- Available at age 70½+
- Annual limit: $105,000 in 2024 → $108,000 in 2025 (indexed going forward)
- Counts toward your RMD, and bypasses AGI completely
Also available: a one-time QCD (up to $54,000 in 2025) into a charitable remainder trust or charitable gift annuity
QCDs are still unbeatable for retirees who don’t itemize or who want to keep AGI low to avoid Medicare surcharges and Social Security taxation.
The Big Picture
The tools you know—DAFs, QCDs, direct giving—are still here. But timing now matters more. The AGI floor, the 35% deduction cap, and upcoming DAF regulations all call for smarter planning.
Let’s map out your 2025–2026 giving plan before December 31.
—
Steve Richardson, CPA
stever@srcocpa.com
General information only. Not personalized tax advice. Let’s talk before acting.