Give More But Pay Less: An Essential Guide to Tax-Smart Charitable Giving in 2026

Changes in the tax laws might be confusing, but there are still ways to be generous without sacrificing your financial security. A donor-advised fund is one place to start.

Caleb Lund, CAP®'s avatar
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published
in Features

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Do you wonder how you can save on taxes while giving more to charity? As you reflect on your 2025 tax bill, it's an ideal time to consider your charitable, financial and tax planning for 2026.

To help start your planning, we'll answer three questions:

  • What tax rules affect charitable giving in 2026?
  • What are some charitable giving strategies that can be used to reduce taxes?
  • Why is a donor-advised fund (DAF) a tax-smart way to give to charity?

You'll walk away with ideas on how to pay less in taxes and have more money to give to charity, whether you choose to itemize deductions or take the standard deduction for your 2026 taxes.

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The tax rules that affect charitable giving in 2026

Two new rules for itemizers. Under the One Big Beautiful Bill Act (OBBBA), only aggregate charitable contributions that exceed 0.5% of your adjusted gross income (AGI) will be deductible.

If your AGI is $300,000, for example, you can deduct any contributions in excess of $1,500 ($300,000 times 0.5%).

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How the 0.5% AGI Floor Affects Itemized Charitable Deductions

Example AGI

New AGI Rule (0.5%)

Minimum Contribution Required for Eligible Deduction

$100,000

0.5%

$500

$200,000

0.5%

$1,000

$300,000

0.5%

$1,500

Additionally, if you're in the 37% income tax bracket ($640,600 and higher for single filers or $768,700 and higher for married couples filing jointly), the OBBBA caps the value of your itemized deductions, including charitable deductions, at 35%.

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Charitable deduction limits for itemizers. Overall deductions for contributions to public charities, including DAFs, are generally limited to 50% of your AGI. The limit increases to 60% of AGI for cash contributions. For appreciated non-cash assets held more than one year, the limit is 30% of AGI.

If your charitable deduction exceeds your AGI limit in 2026, you can carry the excess deduction amount forward in up to five additional tax years (while still staying within your AGI limit for each year).

Standard deduction amounts for non-itemizers. Itemizing makes sense if your total itemized deductions exceed the standard deduction. For 2026, the standard deduction amount is $16,100 for single filers and $32,200 for married couples filing jointly.

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Standard Tax Deduction Increase

Filing Status

2025 Deduction

2026 Deduction

Single filers

$15,750

$16,100

Married couples filing jointly

$31,500

$32,200

If you'll take the standard deduction for your 2026 taxes, the OBBBA allows you to deduct an additional amount for your cash contributions to qualified operating charities: up to $1,000 if you're a single filer or $2,000 if you're a joint filer.

Note that a DAF is not an operating charity, so the charitable deduction can't be used for DAF contributions. (Read more about tax law changes.)

Charitable-giving strategies that can reduce taxes

Potentially eliminate capital gains taxes by donating appreciated non-cash assets. You can have stock shares, real estate, crypto or another non-cash asset that has gained a lot of value relative to your original cost.

While you could sell the asset and give cash to charity after the sale, donating an appreciated non-cash asset held for more than one year is tax-smart and can unlock additional funds for charity in two ways:

  • First, you potentially eliminate the 15% or 20% capital gains tax you would incur if you sold the assets and donated the proceeds, which may increase the amount available for charity by up to 20%
  • Second, you could potentially claim a fair market value charitable deduction for the tax year in which you make the gift, assuming you itemize (donation deduction is subject to certain AGI limitations)

Offset unexpected income with a charitable contribution and deduction. You may have a financial windfall in 2026 — a large bonus at work, conversion of a traditional IRA to a Roth IRA or equity-compensation awards. This income is taxable and could push you into a higher-rate tax bracket.

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One way to reduce your taxable income is to donate to charity and claim a deduction, if you itemize, in an amount that entirely or partially offsets the additional income.

Bunch charitable contributions to maximize deductions. You may find that your total itemized deductions for 2026 are below your standard deduction amount. If you frequently give to charity, you may wish to explore a bunching strategy:

  • Consolidating two years of charitable contributions (2026 and 2027) into this year to exceed your standard deduction amount
  • Itemizing deductions for 2026 taxes
  • Taking the standard deduction for 2027

This strategy maximizes both itemized and standard deductions and can result in larger tax savings than two years of standard deductions.

In addition, if you itemize deductions for 2026, bunching your 2026 and 2027 charitable contributions into 2026 could help you exceed the 0.5% of AGI deduction floor cited in the tax rules section above.

Why is a donor-advised fund (DAF) a tax-smart way to give to charity?

A DAF is a charitable-giving vehicle offered by a 501(c)(3) public charity. It can be used with many of the tax strategies above and provides these tax benefits:

  • You contribute cash, securities or other appreciated assets to a DAF account and could be eligible for a current-year tax deduction if you itemize
  • If your contribution consists of appreciated non-cash assets held more than a year, your deduction generally is the fair market value of the assets (subject to certain AGI limitations), and you can potentially eliminate capital gains taxes on the appreciation
  • You may recommend how contributed assets are invested for potential growth that's tax-free, with the goal of having more money available for grants to charity

Once assets are contributed, you can use the assets for recommending grants to the charities of your choice immediately or over time.

What you can do next:

Related Content

The subsidiaries and affiliates of The Charles Schwab Corporation and DAFgiving360 do not provide specific individualized legal or tax advice. Please consult a qualified legal or tax advisor where such advice is necessary or appropriate.

A donor's ability to claim itemized deductions is subject to a variety of limitations depending on the donor's specific tax situation.

Contributions made to DAFgiving360 are considered an irrevocable gift and are not refundable. Once contributed, DAFgiving360 has exclusive legal control over the contributed assets.

Contributions of certain real estate, private equity, or other illiquid assets may be accepted via a charitable intermediary, with proceeds transferred to a donor-advised fund (DAF) account upon liquidation. Call DAFgiving360 for more information at 800-746-6216.

Market fluctuations may cause the value of investment fund shares held in a donor-advised fund (DAF) account to be worth more or less than the value of the original contribution to the funds.

DAFgiving360™ is the name used for the combined programs and services of Donor Advised Charitable Giving, Inc., an independent nonprofit organization which has entered into service agreements with certain subsidiaries of The Charles Schwab Corporation. DAFgiving360 is a tax-exempt public charity as described in Sections 501(c)(3), 509(a)(1), and 170(b)(1)(A)(vi) of the Internal Revenue Code. All rights reserved (0426-0CA3) ATL130610-00 (04/26) 00324990

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Caleb Lund, CAP®
Caleb Lund, CAP®
Director, Charitable Strategies Group, Schwab Charitable

Caleb is Director of the Charitable Strategies Group at Schwab Charitable. He oversees the specialized team that conducts due diligence review of complex non-cash assets and educates advisors and donors on tax and legal issues associated with such assets. Caleb brings over a decade of nonprofit management and gift planning experience, which includes serving as a planned giving director for several universities.