Are You Giving Generously, and Tax-Smartly?
When people ask me what I do, one of my favorite ways to answer is with a question: How do you know your charitable giving is really making a difference? And then the follow-up: Are you giving the most you can, in the most tax-efficient way?
Most people pause on that second one. They give generously, often to causes they've supported for years, but they give the same way they always have: a check or a credit card payment near the end of the year. There's nothing wrong with that. But for business owners and high-income families, how you give can make a real difference, both to your tax bill and to how much ends up with the organizations you care about.
October is a great time to think about this. There's still time before December 31 to give with a plan instead of in a rush.
What changed about charitable deductions in 2026?
The tax law passed in 2025 changed the rules for charitable giving starting this year. A few changes worth knowing:
There's a new floor for itemizers. If you itemize, only the portion of your giving above 0.5% of your adjusted gross income (AGI) is deductible. With an AGI of $400,000, for example, the first $2,000 of gifts doesn't count toward your deduction.
The benefit is capped for the top bracket. If you're in the 37% bracket, the tax benefit of itemized charitable deductions is capped at 35%.
Non-itemizers get a deduction again. If you take the standard deduction, you can now deduct up to $1,000 of cash gifts ($2,000 for married couples filing jointly), as long as they go directly to qualifying charities. Gifts to donor-advised funds don't count toward this one.
The standard deduction is higher. It's $16,100 for single filers and $32,200 for married couples filing jointly in 2026, so many households won't itemize unless they plan for it.
None of this means you should give less. It means the strategy behind your giving matters more than it used to.
Are you writing checks when you could be giving stock?
This is one of the most common missed opportunities I see. If you own stocks, mutual funds, or other investments that have grown in value, and you've held them for more than a year, donating them directly to charity can be far more efficient than selling them and giving cash.
Here's why:
You can generally deduct the full fair market value of the investment, not just what you paid for it.
Neither you nor the charity pays capital gains tax on the growth.
The charity receives the full value of your gift.
Say you bought shares years ago for $4,000 and they're now worth $10,000. If you sell them and donate the proceeds, you owe tax on the $6,000 gain first. If you donate the shares directly, that gain is never taxed, and if you itemize, you may be able to deduct the full $10,000.
A couple of things to keep in mind. Deductions for appreciated investments given to public charities are generally limited to 30% of your AGI, with a five-year carryforward for anything above that. And investments that have lost value are usually better sold first, so you can claim the loss, then donate the cash.
Would a donor-advised fund help you give on your own timeline?
A donor-advised fund (DAF) works a bit like a charitable savings account. You make a contribution, take the tax deduction in the year you contribute, and then recommend grants to the charities you choose over time: this year, next year, or years from now.
A DAF can be especially helpful when:
You've had an unusually high-income year, such as a business sale, a large bonus, or a big capital gain, and a larger deduction now would help.
You want to "bunch" several years of giving into one year so you clear the standard deduction and the new 0.5% floor, then take the standard deduction in the years in between.
You want to donate appreciated stock but support several charities without extra paperwork.
You'd like to involve your children or grandchildren in deciding where the money goes.
Your favorite charities still get steady support. You simply decide when the deduction works best for you.
Are you 70½ or older with an IRA?
If so, a qualified charitable distribution (QCD) may be the most tax-efficient way for you to give. A QCD lets you send money directly from your IRA to a qualifying charity, up to $111,000 per person in 2026.
The distribution isn't included in your taxable income.
Once you've reached RMD age (73 for most people today), a QCD counts toward your required minimum distribution.
Because it lowers your income instead of relying on an itemized deduction, it isn't affected by the new 0.5% floor or the 35% cap. A lower income can also help with things like Medicare premiums.
The key details: the money has to go directly from your IRA custodian to the charity, not to you first. QCDs can't be made to a donor-advised fund, and they come from IRAs, not workplace plans like 401(k)s.
Which approach fits you?
There's no single right answer, and the best plan often combines more than one of these. A simple way to start thinking about it:
Giving smaller amounts and taking the standard deduction? Direct cash gifts may qualify for the new non-itemizer deduction.
Holding investments with big gains? Consider giving shares instead of cash.
Having a high-income year, or want to bunch your giving? A donor-advised fund may make sense.
Age 70½ or older with an IRA? Look at a QCD first.
What should you do before December 31?
Start early. Stock transfers and new donor-advised fund accounts can take a few weeks to process, and the gift has to be complete by year-end to count for 2026.
Keep your paperwork. For any single gift of $250 or more, you'll need a written acknowledgment from the charity. Some non-cash gifts over $5,000 also require a qualified appraisal.
Look at the whole picture. Your giving should fit alongside your retirement plan, your estate plan, and what you want to leave for your family.
What does giving with purpose look like for you?
The best giving plans start with values, not tax rules. What causes matter most to you? What difference do you want to make, and how will you know you've made it? Once that's clear, the tax strategy is simply a way to help your generosity go further.
That's something we help clients with every year. Through our Financial Gravity Family Office services, we can also coordinate your giving with your investment, retirement, and estate planning so it all works together.
Let's make your generosity go further
If you're planning to give this year, or want to make sure you're giving as tax-smartly as you are generously, I'd love to help. Schedule a complimentary clarity call and we'll look at which strategies make sense for you.
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This article is for general educational purposes and isn't tax or legal advice. Everyone's situation is different, so talk with your tax advisor before making charitable giving decisions.
