Are you thinking about donating to your favorite charity before the New Year? You may want to consider tax law changes coming in 2026 before deciding whether to make your gift in December or wait until next year.
Changes to federal tax law this summer that take effect Jan. 1 mean high earners who itemize deductions may see a bigger benefit if they donate before the end of this year, tax experts say.
However, people who take the standard deduction may be better off waiting until next year. “The timing is very important this year,” said Amie Kuntz, chair of the Individual and Self-Employed Tax Committee at the American Institute of CPAs.
Here's what you need to know as the 2025 charitable giving deadline approaches year-end.
What happens if I itemize deductions and make charitable donations?
For people who itemize – meaning they deduct multiple items when filing a tax return instead of taking the standard fixed deduction – the new tax law makes two changes starting next year that reduce the benefit from charitable contributions.
The law sets a new “floor limit” for deducting charitable contributions of 0.5 percent of the applicant's adjusted gross income, meaning that only amounts in excess of that limit may be deducted. (Adjusted gross income, in tax jargon, is generally your income after deducting certain “adjustments,” such as contributions to an individual retirement account.)
For example, someone with income of $250,000 in 2026 is only allowed to deduct the portion of contributions that exceed $1,250. (The lower limit applies to an applicant's total contributions.)
However, the same charitable donations in 2025 would include the first $1,250 in the allowable deduction.
There is also a new “cap” that affects high earners.
The law also sets a lower cap on deductible contributions from high-earning donors.
According to the Tax Foundation, a nonprofit research group, the value of charitable deductions for taxpayers in the top tax bracket with a marginal tax rate of 37 percent for 2026 will be reduced to a tax savings of 35 cents on the dollar instead of 37 cents on the dollar. (The top tax rate in 2026 applies to individuals with income over $640,600 and to married couples filing jointly with income over $768,700.)
Michael Aloi, a wealth management adviser at Summit Financial in Stratford, Connecticut, said both changes affect high earners, making donations more beneficial in 2025.
Here's an example from Fidelity Charitable, an independent public charity affiliated with Fidelity Investments that helps thousands of people manage charitable giving:
A taxpayer who earns $1 million and wants to donate $30,000 can currently deduct the full amount from taxable income. At a tax rate of 37 percent, taxpayers could save $11,100 in taxes.
However, from 2026, the taxpayer's maximum deduction amount will decrease for two reasons: the new lower limit of 0.5 percent and the lower tax rate of 35 percent. So a taxpayer donating $30,000 would only save $8,750 in taxes.
How can I optimize the tax advantage of my contributions?
One option when you're listing, according to Mr. Aloi, is to make charitable gifts this year that you've planned to give over several years — a technique sometimes called “bundling.” “This year is a great year to collect if you can afford it,” he said.
What if I'm not sure which charities I want to support?
If you haven't yet decided where you want to direct your donations, you can make your donation through a donor-advised fund. Such funds allow you to get a tax deduction for the current tax year, but the money is distributed as grants over time.
Donor-advised funds are offered by nonprofit subsidiaries of large investment companies and community foundations.
Donors can donate cash or other assets such as appreciated stock to the funds. The fund typically sells the shares in exchange for a donation. Donors can then choose how to invest the funds until they are ready to confirm a distribution.
“It's particularly beneficial to contribute stocks that have appreciated in value to a donor-advised fund,” said Brandon O'Neill, vice president and planning advisor at Fidelity Charitable, which manages more than 200,000 donor-advised accounts. This allows donors to avoid paying capital gains taxes when the shares are sold, leaving a larger portion of the gift available to the charity. “It’s really powerful,” he said.
There is no official deadline for making the money available in a donor-supported fund, but some programs may require regular grants. Fidelity Charitable, for example, requires donors to recommend grants at least every two years, Mr. O'Neill said.
Mary Clements Evans, a certified financial planner in Emmaus, Pennsylvania, said people who use donor-advised funds can get a deduction right away, but then take the time to research charities by reading annual reports and checking tools like Charity Navigator to select groups that will use their donation effectively. “People need to do their due diligence,” she said.
Is there time to open a donor-advised fund for 2025?
It's not too late to open a fund this year. Mr Aloi said online accounts can usually be opened quickly and funds or securities can be moved electronically. Still, he said, financial companies are often busy with year-end transactions in December and accounts must be funded by year-end for the contribution to count for the 2025 tax year. “I wouldn’t wait too long,” he said.
Mr. O'Neill of Fidelity Charitable said donations by check must be postmarked by Dec. 31.
What happens if I don't list the posts?
Because a 2017 tax law significantly increased the standard deduction, fewer taxpayers have filed itemized tax returns, leaving them ineligible for a deduction for charitable contributions.
But starting next year, people who take the standard deduction ($16,100 for single filers and $32,200 for married couples filing jointly in 2026) will also be able to claim a direct charitable contribution deduction of up to $1,000 for single filers and $2,000 for married couples filing jointly. (However, contributions to donor-advised funds are not deductible, according to Fidelity Charitable.)
A similar deduction of a smaller amount was temporarily available to encourage donations during the pandemic years of 2020 and 2021.
Because of the 2026 change, Amy R. Segal, an attorney specializing in charities and nonprofits at WilmerHale, said, “If you're planning on donating this December, you might as well donate in January.”
Charities expect some smaller donations will likely arrive early in the new year, she said, as donors who don't itemize want to get the deduction.
Can I donate from my individual retirement account?
Individuals age 70½ and older can donate up to $108,000 directly to eligible charities from an individual retirement account in 2025 and exclude the money from their taxable income. (However, donor-advised funds are not eligible for qualified charitable distributions under Internal Revenue Service rules.)
People with traditional IRAs (not Roth IRAs) are generally required to make withdrawals every year starting at age 73 – even if they don't need the money – which increases their taxable income and potentially pushes them into a higher tax bracket. But by making a “qualified charitable distribution” to a charity, donors can meet the requirement while avoiding a higher tax bill.