Plan to Give

The One Big Beautiful Bill (“OBBB”) significantly changed the tax deductibility of charitable contributions in 2026 and onward by introducing two additional limitations for filers who itemize their deductions.

The first limitation sets a 0.5% adjusted gross income (“AGI”) floor on deductible contributions. For example, if a filer's 2026 AGI is $500,000, the first 0.5%, or $2,500, of charitable contributions will be disallowed. In certain circumstances, the disallowed amount may be eligible to be carried forward and applied to future tax years.

The second limitation decreases the tax benefit of all itemized deductions for filers in the highest marginal tax bracket of 37%, including charitable contributions, as adjusted by the first limitation described above. In 2026, married filing joint filers reach this top tax bracket with $768,700 of taxable income.

This second and more significant limitation curtails the tax benefit of deductions for filers in the 37% bracket to 35%. Filers who donate an amount equal to their highest taxed income may unpleasantly discover they still owe residual tax. In addition, this limitation creates a permanent disallowance and provides no mechanism for carryforwards to future tax years.

In the wake of the OBBB, planning strategies for charitable giving have become especially important in year-end planning. Here, we outline strategies and considerations that you should evaluate as you aim to enhance your philanthropic impact.

Planning strategies to consider

1. Accelerate giving into 2025: By making larger charitable contributions in 2025, you might be able to maximize the full value of deductions before the OBBB takes effect.
2. Combine several years of giving: Bunching donations into one year can help you clear the new deduction thresholds and maximize tax benefits.
3. Structure income carefully: Planning the timing of income and deductions can help you avoid the highest tax brackets in years when you make significant charitable gifts.
4. Use Donor-Advised-Funds ("DAFs"): Establishing or contributing to a DAF may allow you to lock in larger tax deductions in 2025 while maintaining flexibility to recommend grants to charities in future years. Whittier Trust offers these services if you need help.
5. Give more strategically: Consider donating appreciated stock or exploring leveraged giving strategies that boost the total impact of your donations.
6. Consider giving from a trust: Certain trust structures can offer tax benefits by filing separate tax returns, which may help avoid some of the new limitations on charitable deductions introduced by the OBBB.
7. Private foundations: If you already have a private foundation, special annual elections might let you increase the amount of your tax-deductible contributions.
8. Supporting your private colleges and universities early: If you are a donor to these institutions, accelerating gifts in 2025 might help them avoid significantly higher excise taxes on their endowment investment income. Reach out to these institutions to confirm if the OBBB changes affect them.

When acceleration may not be best

Accelerating your giving isn’t always the most tax-efficient move. Consider:

1. Unused prior deductions: If you already have unused charitable deductions from prior years, making large gifts now could cause older deductions to expire.
2. Your effective tax rate: Waiting to make charitable gifts until a year when your effective (not marginal) tax rate is higher may yield better savings, despite the new OBBB limitations.
3. Planning with your longevity in mind: Unused contributions may expire upon your or your spouse’s passing, so consider synchronizing your giving with your income to ensure no tax-deductible contribution goes wasted.
4. Making giving an integral part of administering your estate: The OBBB limitations generally do not apply to charitable giving done when administering your taxable estate. Consider developing a more holistic plan for giving after you are gone.

The big picture

Every client’s situation is unique. Your income, estate plan, charitable goals, and timing all influence the best strategy, whether that means maximizing tax efficiency or fulfilling your philanthropic vision, regardless of law changes.

Why you should plan early

Charitable planning works best when it’s done early. This allows enough time for you and your advisors to model different scenarios, make decisions, and implement them smoothly—without the stress of year-end deadlines. Starting early helps ensure your gifts are processed and counted for the tax year without last-minute complications.

Next steps

If charitable giving is a priority for you in 2025, let’s start the conversation now. Whittier Trust can help develop a plan that balances your philanthropic goals with the upcoming changes in the tax law.

To learn more about how Whittier Trust’s services can make a difference for you and your loved ones, start a conversation with a Whittier Trust advisor today by visiting www.whittiertrust.com.