Charitable Giving in 2026: Bunching, Donor-Advised Funds, and the New Floor

Key takeaways

From 2026, non-itemizers can deduct up to $1,000 ($2,000 joint) of cash gifts, and itemizers lose the first 0.5% of AGI of their gifts.
The floor makes bunching several years of gifts into one year, often through a donor-advised fund, more valuable than before.
Appreciated stock held over a year is still the best asset to give; the gain is never taxed and the full value is deductible.
After 70½, qualified charitable distributions from an IRA bypass the deduction system entirely and aren't affected by the new rules.

Most people give to charity for reasons that have nothing to do with taxes. Then they give in the least tax-efficient way possible: cash from a checking account, spread evenly across the year, deducted only if they happen to itemize. The 2025 tax law changed the rules for 2026 in ways that reward planning the gift and penalize the default. So it's worth knowing what changed.

What changed in 2026

A deduction for non-itemizers. Taxpayers who take the standard deduction ($16,100 single, $32,200 joint) can now deduct up to $1,000 ($2,000 joint) of cash contributions to public charities on top of it. Donor-advised funds don't qualify. It's small, but it's permanent, and it helps the majority of households who don't itemize.

A floor for itemizers. Itemized charitable deductions are now reduced by 0.5% of adjusted gross income. A couple with $300,000 of AGI who give $10,000 can deduct $8,500. The first $1,500 of giving buys nothing.

A cap for the top bracket. For taxpayers in the 37% bracket, the tax benefit of itemized deductions, charitable gifts included, is limited to 35%. A $100,000 gift saves $35,000 rather than $37,000.

The SALT cap rose to $40,400, which brings more households back into itemizing, since state and local taxes plus mortgage interest plus charitable gifts clear the standard deduction more often. In Florida, with no state income tax, this shows up mainly through property taxes.

Bunching

The floor and the standard deduction together make bunching the central strategy. Instead of giving $12,000 every year, give $36,000 every third year. In the giving year, itemized deductions clear the standard deduction by a wide margin and you pay the 0.5% floor once rather than three times. In the other two years, take the standard deduction.

Say a joint filer has $250,000 of AGI, $15,000 of property taxes and mortgage interest, and $12,000 of annual gifts. Giving annually, itemized deductions are $15,000 + ($12,000 less a $1,250 floor) = $25,750. That's below the $32,200 standard deduction, so the gifts produce no deduction at all. None. Bunch three years into one and it's $15,000 + ($36,000 less $1,250) = $49,750 of itemized deductions in the giving year, $17,550 more than the standard deduction, and then the standard deduction in the two off years. Same gifts, same three years, and now there's a real deduction.

Donor-advised funds

The practical problem with bunching is that most people don't want their church or their hospital foundation to get three years of support at once and then nothing. A donor-advised fund fixes that. You contribute the bunched amount to the fund in the giving year, take the deduction then, and recommend grants to charities on whatever schedule you like, including the same $12,000 a year you were giving before. The fund's assets can be invested while they wait.

Donor-advised funds accept cash, appreciated securities, and sometimes more complex assets. Contributions of appreciated stock held over a year are deductible at full market value up to 30% of AGI, with a five-year carryforward of any excess.

Two limits worth knowing. Donor-advised fund contributions don't qualify for the new non-itemizer deduction, and they can't receive qualified charitable distributions from an IRA.

Appreciated securities

Giving stock or fund shares held more than a year, rather than cash, has always been the most efficient gift, and nothing in the new law touched that. You deduct the full market value and never pay the capital gains tax on the appreciation; the charity sells the shares tax-free. A $20,000 gift of stock with a $5,000 basis avoids tax on $15,000 of gain, worth $2,820 to $3,570 at the 18.8% to 23.8% combined rates, on top of the deduction.

The mechanics are simple through a donor-advised fund or directly to any charity with a brokerage account. Then you take the cash you would have given and buy the same stock back, which resets the basis higher. For anyone unwinding a concentrated position, this is the first tool we reach for.

Never give securities with a loss. Sell them, take the loss, give the cash.

Qualified charitable distributions

For donors over 70½, the QCD sidesteps everything above. A gift sent directly from an IRA to a charity is excluded from income rather than deducted, so the standard deduction, the 0.5% floor, and the 35% cap are all beside the point. It counts toward required minimum distributions, reduces AGI for Medicare and Social Security purposes, and is limited to $111,000 per person in 2026. For retirees with IRAs, it's the default way to give, and it should be the first money out of the IRA each year.

Larger gifts and structures

Above a certain size, other tools come into play. A charitable remainder trust accepts appreciated assets, sells them without tax, pays the donor an income for life or a term, and leaves the remainder to charity; we cover it in charitable remainder trusts. A charitable gift annuity does something similar through a charity directly. Private foundations suit families with multi-million-dollar giving plans and a desire for control, at the cost of administration and lower deduction limits. And naming a charity as beneficiary of a traditional IRA, discussed in our guide to beneficiary designations, delivers the full account with no income tax to anyone.

The annual plan

For each client who gives, the year's charitable plan fits on one page: the amount, the asset (cash, stock, or IRA), the vehicle (direct, donor-advised fund, or QCD), the timing relative to the bunching cycle, and the deduction or exclusion expected. We build it alongside the rest of the tax planning calendar, because the gift interacts with gains, conversions, and the year's bracket. None of this is about giving more or less. It's about making the giving you already do cost you less.

Frequently asked questions

Does the 0.5% floor apply to QCDs?

No. QCDs are excluded from income, not deducted, so the floor, the standard deduction, and the 35% cap don't apply to them.

Can I bunch gifts of appreciated stock?

Yes. Contributing several years of stock gifts to a donor-advised fund in one year captures both the bunching benefit and the avoided gain. The 30% of AGI limit on appreciated property gifts carries forward five years if exceeded.

What records do I need?

A written acknowledgment from the charity for any gift of $250 or more, a qualified appraisal for non-cash gifts over $5,000 (other than publicly traded securities), and Form 8283 for non-cash gifts over $500.

Is the new non-itemizer deduction worth planning around?

Not really. At $2,000 for a joint filer and 12% to 24% brackets, it's worth a few hundred dollars. Take it if you give cash and don't itemize. Don't restructure your giving for it.

Joseph G. Valerio, CFP®, EAFounder and Lead Advisor at Valerio Wealth Management, a fee-only, fiduciary virtual family office in Miami, Florida. One advisor, credentialed in both financial planning and federal tax. About Joseph

This article is general education, not individualized advice, and it is not tax, legal, or accounting advice. Figures reflect federal law for the year stated and can change. Valerio Wealth Management does not prepare or file tax returns. Speak with a qualified professional about your own situation before acting.