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Giving Tuesday Tax Rules Change: Act Now!
3 Dec
Summary
- New rules starting 2026 limit charitable giving deductions.
- Deductions are capped at 1% of adjusted gross income.
- Donor-advised funds offer a strategy to 'bunch' donations.
Major changes to charitable giving tax rules are approaching in 2026, prompting year-end planning. For taxpayers accustomed to deducting their donations, a significant shift means only contributions exceeding 1% of their adjusted gross income will be deductible. This will affect many, as even moderate donations may no longer qualify for deductions under the new regulations.
To mitigate the impact, financial experts are recommending strategies such as "bunching" charitable contributions. This involves consolidating multiple years' worth of donations into a single tax year to maximize current deductibility. Donor-advised funds are highlighted as a key tool for implementing this strategy effectively.
By contributing to a donor-advised fund now, individuals can claim the full deduction in the current tax year. The funds can then be invested and disbursed to charities over subsequent years. This approach not only secures immediate tax advantages but also simplifies tracking donations and allows for strategic giving even with the impending rule changes.
