Tax-efficient charitable giving means structuring your donations so you can support the causes you care about while making the most of the tax benefits available to you. New federal tax rules have changed how charitable contributions are treated for both individuals and corporations, making the type, timing, and structure of your charitable gifts increasingly important.
Here at FSA, it’s our mission to make a positive impact on our community. (You can learn more about how we do this on our FSA Gives Back page.) We encourage our clients to do the same; not only because charitable giving is a powerful way to support causes you care about, but also because it can help them reduce their tax burden.
What’s changed for charitable giving in 2026?
There are several important changes to understand if you’re planning charitable donations.
A new 0.5% AGI floor for itemized charitable deductions
Beginning in 2026, if you itemize deductions, charitable contributions are deductible only to the extent that they exceed 0.5% of your adjusted gross income (AGI).
For example, if your AGI is $200,000, 0.5% is $1,000. If you make $3,000 of otherwise deductible charitable contributions during the year, generally only $2,000 is eligible to be deducted under the new floor, before applying other applicable limitations.
A charitable deduction is now available to some non-itemizers
Beginning in 2026, taxpayers who take the standard deduction can generally deduct up to $1,000 of qualifying cash contributions, or $2,000 for married couples filing jointly, subject to the applicable rules and limitations. This means charitable giving can provide a federal tax benefit even if you don’t itemize deductions.
Corporations face a new charitable deduction floor
For tax years beginning after December 31, 2025, corporations generally can deduct charitable contributions only to the extent that the contributions exceed 1% of taxable income and do not exceed 10% of taxable income, subject to special rules and exceptions. Contributions above the 10% limit may generally be carried forward for up to five years.
7 tax-efficient charitable giving strategies for 2026
Here are several strategies worth discussing with your financial and tax advisors.
1. Give cash to a qualified charity
Cash remains one of the simplest ways to support a charitable organization. If your contribution qualifies under federal tax rules, you may be able to claim a charitable deduction or, if you don’t itemize, the limited 2026 deduction.
For taxpayers who itemize, however, the new 0.5% AGI floor means the tax benefit of smaller annual donations may be different than it was in previous years. That makes it worth looking at your charitable giving as part of your broader tax strategy rather than treating every donation independently.
Example: You have $200,000 of AGI and typically donate $2,000 a year. The first $1,000 of charitable contributions falls within the 0.5% AGI floor.
2. Consider donating appreciated investments
If you own investments that have increased significantly in value, donating some of those assets directly to charity may be more tax-efficient than selling them first and donating the cash.
For example, imagine you own stock worth $20,000 that you originally purchased for $8,000. If you sell the stock, the $12,000 appreciation may create a capital gain. If you instead contribute eligible appreciated securities directly to a qualified charity, you may be able to receive a charitable deduction based on the fair market value while avoiding recognition of the capital gain, subject to the applicable rules and limitations.
The tax treatment depends on factors such as the type of asset, how long you’ve held it, the organization receiving the contribution, and your overall deduction limits.
Tip: Before selling a highly appreciated investment to fund a charitable gift, ask whether donating the asset itself could produce a better tax outcome.
3. Consider bunching your charitable contributions
If you regularly give relatively small amounts to charity, the new 0.5% AGI floor may make the timing of your contributions more important. Bunching means concentrating multiple years of planned charitable contributions into one tax year rather than spreading them evenly across several years.
Example: Rather than donating $3,000 every year for three years, you might consider whether making a larger contribution in one year could create a more meaningful tax benefit, depending on your circumstances.
4. Use a donor-advised fund
A donor-advised fund (DAF) is a charitable giving account maintained and operated by a sponsoring 501(c)(3) organization. You contribute assets to the fund, the sponsoring organization has legal control over those assets, and you generally retain advisory privileges regarding grants to eligible charities.
A DAF may be useful if you:
- Want to make a larger charitable contribution in a high-income year
- Want to bunch several years’ worth of charitable giving into one contribution
- Own appreciated assets you’d like to donate
- Want flexibility around which charities receive grants and when
- Want to create a more organized long-term charitable giving strategy
Note: Contributions to a DAF are generally irrevocable, so it’s important to understand how the arrangement works before contributing.
5. Make a qualified charitable distribution from your IRA
If you’re 70 1⁄2 or older and have an eligible Individual Retirement Account (IRA), a qualified charitable distribution (QCD) can be an especially valuable charitable giving strategy.
A QCD is generally a distribution made directly from an IRA trustee to an eligible charitable organization. If the requirements are met, the distribution can generally be excluded from taxable income. A QCD can also count toward your required minimum distribution (RMD).
For 2026, the annual QCD exclusion limit is $111,000.
Remember: A QCD isn’t the same as a charitable deduction. If a QCD is excluded from your taxable income, you cannot also claim that same amount as an itemized charitable contribution deduction.
Example: Your RMD is $30,000, and you direct $10,000 of an eligible IRA distribution directly to a qualified charity as a QCD; that $10,000 can potentially satisfy part of your RMD while remaining excluded from taxable income, assuming you meet all applicable requirements.
You may also be interested in: 6 smart strategies to manage RMDs and reduce your taxable income in retirement
6. Plan charitable gifts around major financial events
Charitable giving can be particularly valuable to consider when your financial circumstances are changing. For example, you may want to review your charitable giving strategy before:
- Selling a business
- Selling highly appreciated investments
- Retiring
- Receiving a significant bonus
- Experiencing an unusually high-income year
- Taking large IRA distributions
- Beginning a major estate or legacy-planning process
7. Tax-efficient charitable giving for businesses
Charitable giving can be part of a company’s community involvement and financial strategy, but the tax rules depend on the business structure.
- For C corporations, contributions generally must exceed 1% of taxable income to qualify for a deduction. Contributions above the 10% limit may generally be carried forward for up to five years.
- For other business structures, such as partnerships and S corporations, charitable contributions generally flow through to the owners’ returns, rather than being treated in exactly the same way as a C corporation’s deduction. The rules can become complex, particularly when noncash property or other special circumstances are involved.
If your business makes substantial charitable contributions, it’s important to coordinate your giving strategy with your tax planning rather than assuming the rules that apply to one type of business apply to another.
Which tax-efficient charitable giving strategy is right for you?
There isn’t one charitable giving strategy that works for everyone. Your best option depends on your income, assets, tax situation, age, charitable goals, and whether you itemize deductions.
| Strategy | May be particularly useful for | Potential tax benefit | Key consideration |
| Cash donation | Most charitable donors | Charitable deduction if eligible; limited deduction may also be available to certain non-itemizers in 2026 | 0.5% AGI floor applies to itemizers |
| Appreciated securities | Investors with significant unrealized gains | Potential charitable deduction while avoiding recognition of certain capital gains | Special rules and deduction limits apply |
| Bunching | Donors making regular annual contributions | May help concentrate deductions into a year when they provide greater value | Requires advance planning |
| Donor-advised fund | Donors wanting flexibility over when grants are made | Potential deduction when eligible contribution is made | Contributions are generally irrevocable |
| QCD | IRA owners age 70½ and older | Qualifying distribution can generally be excluded from income and count toward an RMD | Must be made directly to an eligible charity |
| Corporate giving | C corporations making charitable contributions | Potential corporate charitable deduction | 1% floor and 10% ceiling apply beginning in 2026 |
What charities qualify for a tax deduction?
Not every nonprofit or tax-exempt organization automatically qualifies for a federal charitable contribution deduction. Generally, qualifying organizations can include certain:
- Charitable organizations
- Religious organizations
- Educational and scientific organizations
- Government entities
- Veterans’ organizations
- Fraternal societies operating under the lodge system
- Nonprofit cemetery companies
The IRS recommends using its Tax Exempt Organization Search tool to verify whether an organization is eligible to receive tax-deductible contributions.
Keep the right records for your charitable donations
When you donate, especially if the donations are large, keep thorough records. For cash donations, it’s as simple as saving your bank statements or getting an acknowledgment letter from the charity. For non-cash donations, such as property, you’ll need an itemized list of the donated goods and their fair market value.
- For contributions of $250 or more, you generally need a contemporaneous written acknowledgment from the charity
- If the total deduction you’re claiming for noncash contributions is more than $500, you generally must file Form 8283 with your tax return
- For noncash property valued at more than $5,000, additional appraisal and substantiation requirements generally apply
Make your generosity work for you—and for the causes that matter most
Tax-efficient charitable giving allows you to make a bigger impact while reducing your tax burden. Save on taxes, help a charitable organization in need, and leave a legacy—sounds like a win, win, win! Just remember to give to qualified organizations, keep your records in order, and be aware of the special rules that apply to different types of donations.
If you want to find out more about how charitable giving can fit into your tax strategy, let’s talk. There’s no one-size-fits-all approach, but with the right planning, you can give back while saving on taxes.
Learn more about FSA Gives Back
Giving back is part of who we are at Financial Solution Advisors. Founding Partner Joel Chamberlain has spoken about the role philanthropy and community involvement play in leadership at FSA.
Watch Joel Chamberlain’s Legacy of Leaders interview to learn more about why giving back is an integral part of FSA’s approach to business and community.
Tax-efficient charitable giving FAQs
How much of a charitable donation is tax deductible?
It depends on the type of contribution, the organization receiving it, your AGI, and whether you itemize deductions. For taxpayers who itemize, charitable contributions generally must exceed 0.5% of AGI before the excess can be deducted in 2026. Other percentage limitations can also apply depending on the type of contribution and recipient organization.
Can I deduct charitable donations if I don’t itemize?
Yes. Beginning in 2026, eligible taxpayers who take the standard deduction can generally deduct up to $1,000 of qualifying cash contributions, or $2,000 for married couples filing jointly, subject to the applicable rules.
Is donating stock better than donating cash?
It can be, particularly if you own appreciated securities. Donating eligible appreciated assets directly to charity may allow you to claim a charitable deduction based on the property’s fair market value while potentially avoiding recognition of capital gains that could result from selling the investment first. The rules depend on the asset and your circumstances.
What is the most tax-efficient way to donate from an IRA?
For eligible taxpayers age 70 1⁄2 or older, a qualified charitable distribution may be an effective strategy. A qualifying QCD is generally excluded from taxable income and can count toward an RMD. The 2026 annual QCD exclusion limit is $111,000.
What is a donor-advised fund?
A donor-advised fund is a separately identified fund or account maintained by a sponsoring 501(c)(3) organization. The sponsoring organization has legal control of the assets, while the donor generally retains advisory privileges over grants and investments.
How much do I need to donate to get a tax deduction?
There isn’t one universal dollar amount. For itemizers in 2026, charitable contributions generally must exceed 0.5% of AGI before the excess becomes deductible, and other limitations can apply. For certain non-itemizers, a limited deduction is available for qualifying cash contributions beginning in 2026.
Can my business deduct charitable donations?
Generally, yes, if the business and contribution qualify under the applicable tax rules. However, the rules depend on the business structure. For C corporations, 2026 introduced a 1% floor while retaining a 10% ceiling on charitable contribution deductions, subject to special rules and exceptions.
What about donations when you receive something in return?
If you receive goods or services in exchange for your contribution, you can generally deduct only the portion of the payment that exceeds the fair market value of what you received.
For example, if you pay $500 for a charity dinner and the fair market value of the meal is $100, generally only $400 is potentially deductible.