What To Know About the New Rules for Charitable Giving
By Brian Famigletti, Managing Director & Head of Marketing
New Year, New Rules
As year-end rolls around, high-net-worth individuals may be looking to offset tax obligations with charitable giving. However, that process will change in the year to come, with the passage of President Donald Trump’s One Big Beautiful Bill Act (OBBBA).
The OBBBA covers a lot of ground, but here we’re interested in the new rules for charitable giving that will take effect in 2026. Understanding these changes will help you determine how to take action this year in order to maximize your tax efficiency.
Lower Cap, Higher Floor
First off, the cap is coming down from 37% to 35% for high earners, which means charitable donations will not be as valuable as they have been in previous years.
In other words, individuals in the 37% federal income tax bracket who donate $100,000 in 2025 would see tax savings of $37,000. In 2026, those savings would be limited to just $35,000. A drop of two percentage points might not sound like much, but for high-net-worth individuals, it can quickly add up.
That said, unused deductions can be “saved” and applied over the next five years, meaning you can take advantage of the current rules this year and reap the benefits up to 2030.
For high-net-worth individuals looking to make full use of the current 37% rate, front-loading donations in 2025 will allow you to offset as much tax as possible. By making donations this year, perhaps into a holding fund, you will be able to gain the full 37% value.
Notably, there is also a higher floor in place; the tax break only applies as long as it is equal to 0.5% of adjusted gross income (AGI). This means that, if you want to receive a deduction on a $10,000 gift, you would need an AGI of $2 million.
Given this higher floor, high-net-worth individuals who support a range of causes might consider bunching gifts: making fewer, larger donations to each foundation, rather than spreading it out.
No More Sunset for Estate Tax Exemption
There are more changes elsewhere in the code.
The OBBBA made permanent the (formerly) temporary limit for public gifts at 60% of AGI. This affords individuals more flexibility when giving to public charities. When giving to private charities, the limit remains at 30% of AGI.
Finally, the OBBBA raises the estate and gift tax exemption to $15 million per person (doubled for joint filers). The amount will be adjusted for inflation in future years, and the legislation lists no sunset.
That’s good news for individuals with large estates who were not looking forward to the new year, when the 2025 exclusion — under $14 million — was previously due to be slashed by 50%. Charitable giving has long been an effective strategy to minimize inheritance taxes, but under these more lenient rules, there is now less pressure to do so.
Broadly speaking, the new rules for charitable giving are more favorable for those making larger individual donations, and less effective for those looking to make a variety of relatively small charitable gifts.
Wondering how best to address these changes in your financial strategy? Schedule a consultation with Griffin Asset Management today.
Sources:
Barrons: Big Changes Are Coming to Charitable Giving. How to Get Maximum Savings.
Orange County Community Foundation: Charitable Giving After “One Big Beautiful Bill”: What Donors Need to Know
