The rules for charitable deductions will change starting in 2026, reducing the tax value of giving for high-income households. If you’re considering major charitable gifts, 2025 offers the last year under the current, more favorable framework. With new limits taking effect next year, many donors may benefit from accelerating or “bunching” contributions before year-end 2025 to preserve significant tax savings. 

The New Rules: What Changes in 2026 

With significant updates taking effect next year, the charitable-giving landscape will look very different for high-income taxpayers. The One Big Beautiful Bill (OBBB), signed in July 2025, rewrites key parts of charitable-giving tax law for individuals. 

1. A new floor on deductions 

Starting in 2026, only the portion of charitable gifts that exceed 0.5 percent of a taxpayer’s “contribution base” (which is generally adjusted gross income, or AGI) will qualify for a deduction. For example, a taxpayer with a contribution base of $2 million would not be able to deduct their first $10,000 of charitable gifts. However, taxpayers are permitted to carry forward contributions disallowed by this floor to future years. 

2. A cap on the tax benefit 

Higher-income taxpayers in the top tax bracket (37 percent) will have all their itemized deductions (including charitable donations) reduced by 2/37 of the lesser of (1) the amount of their itemized deductions or (2) their taxable income that exceeds the amount at which the 37 percent bracket begins. Functionally, this has the effect of limiting the benefit of the deduction to what it would be at the 35 percent bracket. There is no carryforward provision for amounts disallowed by this cap, unlike the 0.5 percent floor discussed above.  

3. A small deduction for non-itemizers 

Beginning in 2026, individuals who claim the standard deduction can still deduct limited cash gifts—up to $2,000 for married taxpayers filing jointly, or $1,000 for all other filing statuses. This provision doesn’t apply to gifts of property or gifts to donor-advised funds or private foundations. 

Together, the new floor and the new cap create what some advisors are calling a “deduction haircut” for charitable giving. The mechanics remain, but the leverage is smaller. 

Why 2025 Is a Planning Window 

Gifts made during calendar year 2025 still fall under the current rules, with no AGI floor or cap on benefit. For high-net-worth individuals who itemize, that means every qualifying dollar given this year can still offset income at their full marginal rate. 

The opportunity is clear: 2025 may be the last chance to lock in today’s more favorable deduction environment before the new restrictions arrive. 

Strategies to Consider 

Here are several planning strategies to help make the most of the current charitable deduction rules before they change in 2026. 

1. Accelerate gifts into 2025 

Making large charitable contributions before December 31, 2025, allows donors to maximize deductions under current rules. Using donor-advised funds (DAFs) or charitable trusts enables you to claim the deduction now while distributing funds to charities over time. 

2. Bunch contributions 

If you typically make similar gifts each year, consider “bunching” several years’ worth of giving into 2025. This approach helps overcome the 2026 deduction floor and preserves higher deduction efficiency. 

3. Coordinate charitable and estate strategies 

For ultra-high-net-worth families, gifting decisions often connect with estate and business-succession plans. YHB’s Private Client Services team can help align charitable vehicles with liquidity events, business transitions, and generational wealth transfers. 

4. Model both years 

Because every situation is unique, running a side-by-side comparison of 2025 vs. 2026 is essential. A shift in income, tax bracket, or itemization status can change the outcome. 

Annual and Lifetime Gift Tax Limits 

Charitable strategies often intersect with broader wealth-transfer goals, making it important to understand the available gift-tax thresholds. 

Year	Annual Exclusion	Lifetime Exemption (per person)	Married Couple Combined
2025	$19,000 per recipient	$13.99 million	$27.98 million
2026	$19,000 per recipient	$15 million	$30 million
2027	Indexed for inflation (to be announced)	Indexed from $15 million base	Indexed from $30 million base

Direct payments for tuition or medical expenses remain unlimited and do not count toward these thresholds. 

These rising exemption amounts provide additional flexibility for clients who want to align lifetime giving, estate planning, and philanthropy in one coordinated strategy. 

Key Takeaways 

• The 2026 deduction haircut will reduce the value of charitable giving for high-income donors. 

• 2025 is the final year to make large gifts under current, more generous deduction rules. 

• The annual exclusion for small gifts remains at $19,000 per recipient, and the lifetime estate and gift tax exemption rises to $15 million per person in 2026. 

• Strategic giving now—through DAFs, trusts, or direct gifts—can preserve more of your intended impact. 

How YHB Can Help 

YHB’s Private Client advisors work closely with clients’ legal teams to design charitable-giving strategies that are both tax-efficient and mission-driven. Whether you’re planning a significant donation, creating a private foundation, or integrating philanthropy into a succession plan, our team can help you make informed, confident decisions before these new rules take effect. 

Let’s discuss your 2025 charitable-giving strategy now before the window closes. Contact us today to get started.