Revisit your giving strategy: what OBBBA changed

Charitable giving has long been one of the more personal corners of financial planning. The amounts, the causes, the timing: these decisions often reflect values as much as tax strategy. The OBBBA, signed into law in 2025, adds a new layer of complexity that makes the “when” and “how” of giving matter more than ever.

What’s new: three changes to know

The 0.5% AGI floor for itemizers

Starting in 2026, itemizing individuals may deduct charitable contributions only to the extent their aggregate contributions exceed 0.5% of their contribution base, generally AGI (Adjusted Gross Income) for this purpose. It’s a small percentage on paper, but the math adds up.

Take a donor with $1 million in AGI. The first $5,000 of charitable giving each year is now excluded from deductibility. A donor giving $25,000 can only deduct $20,000. Give $5,000 or less, and the deduction disappears entirely.

For high earners who give consistently but modestly relative to their income, this floor will quietly erode deductible amounts year over year. Generally, the disallowed amounts are permanently lost.

The 35% cap for top-bracket taxpayers

The limitation affects taxpayers whose taxable income, increased by itemized deductions, exceeds the threshold for the 37% bracket. For taxpayers affected by the top-bracket limitation, the benefit of itemized deductions can effectively be reduced from 37 cents to 35 cents per dollar.

Combined with the AGI floor, high-earning donors face a two-layer constraint: first, a portion of giving that’s ineligible for deduction; then, a cap on the tax benefits from what remains. For those making large pledges, modeling the after-tax impact before finalizing commitments isn’t optional; it’s essential.

The new deduction for non-itemizers

Not every change in the OBBBA is a constraint. Beginning in 2026, taxpayers who do not itemize may claim a charitable deduction in addition to the standard deduction: up to $1,000 for single filers and $2,000 for married couples filing jointly.

This benefits most American taxpayers who don’t itemize. Routine givers, those who donate steadily but don’t have enough deductions to justify itemizing, gain a meaningful new benefit with no additional planning required. Do keep in mind these have to be cash gifts to public charities.

How to structure gifts more deliberately

The floor and cap create a clear incentive to think differently about timing and vehicles. Several strategies hold up well under the new rules.

Bunching gifts via a donor-advised fund

If your charitable giving is spread across multiple years in modest annual amounts, each installment may never clear the 0.5% AGI floor on its own. Bunching, contributing several years’ worth of gifts in a single tax year, concentrates the deductible amount above the floor in one shot, then allows you to distribute grants to your chosen charities over time at your own pace.

A donor-advised fund is a natural tool here. You receive the tax deduction in the year of the contribution but grant distributions to charities can happen over months or years. It separates the timing of the tax benefit from the timing of the actual giving.

Qualified charitable distributions for IRA holders age 70½ and older

Qualified charitable distributions (QCDs) allow donors age 70½ and older to transfer up to $111,000 annually (2026 limit, indexed annually) directly from a traditional IRA to a qualified charity. Note that donor-advised funds are not eligible recipients. QCDs are not charitable deductions; instead, qualifying transfers are excluded from income and can count toward RMDs once RMDs apply.

Critically, QCDs are not subject to the new 0.5% AGI floor. Because the contribution never enters your AGI in the first place, the floor simply doesn’t apply. For older donors with substantial IRA or Roth IRA balances, this remains one of the most tax-efficient giving strategies available.

Gifting appreciated securities

Donating long-term appreciated securities, stocks, mutual funds, or other assets held more than a year, to a qualified charity or donor-advised fund avoids capital gains tax on the appreciation while still generating a deduction for the full fair market value. That deduction is subject to the new floor and cap, but the capital gains avoidance is unaffected by the OBBBA changes.

For donors holding low-basis positions they would otherwise sell, this can be a compelling alternative to writing a check.

Timing large gifts around bracket changes

The 35% cap applies specifically to taxpayers in the top 37% bracket. If a significant income event, a business sale, a large distribution, or a retirement transition, is on the horizon, the year before or after that event may create a bracket window worth planning around. A year in a lower bracket means the cap doesn’t apply at all.

A smarter path forward

None of these strategies require giving less. They require giving more intentionally.

The OBBBA introduced real constraints for high-earning donors, but the mechanics also create clear opportunities for those who plan. The donors most likely to feel the impact are those who continue giving exactly as they have been, without adjusting for the new floor-and-cap combination.

Before finalizing 2026 pledges, it’s worth sitting down with your Kaufman Rossin tax advisor to model your giving against your projected AGI, bracket, and any planned liquidity events. The numbers often tell a different story than intuition suggests and getting it right before gifts are committed protects both your philanthropic goals and your tax position.