Introduction. Charitable organizations continue to play a vital role throughout the United States. Many DWM clients and friends are very involved in philanthropy, not only supporting important causes but in some cases, establishing not-for-profits and managing them to provide direct support for education, mentorship, healthcare, religious, heritage, social services, animals and other causes. It’s our pleasure to help them with their very important missions.
As many charitable organizations continue capital campaigns and major fundraising initiatives, donors are increasingly asking about the current tax implications of charitable giving. Recent tax legislation has introduced several new rules that may affect both cash and non-cash charitable contributions, while long-standing planning opportunities involving appreciated assets and Qualified Charitable Distributions (QCDs) remain extremely valuable.
The following is a high-level overview of several important charitable giving considerations for donors and advisors.
New Deduction Available for Non-Itemizers Beginning in 2026
Beginning in 2026, taxpayers who claim the standard deduction will once again be permitted to deduct certain charitable contributions in addition to their standard deduction.
Under the current rules:
• Single taxpayers may deduct up to $1,000 of qualifying charitable cash contributions.
• Married taxpayers filing jointly may deduct up to $2,000 of qualifying charitable cash contributions.
This deduction is available even if the taxpayer does not itemize deductions. However, it generally applies only to cash gifts made to qualified public charities and does not apply to contributions of appreciated property such as securities, artwork, or collectibles.
This provision is intended to encourage charitable giving among taxpayers who otherwise receive no direct tax benefit from making charitable contributions because they utilize the standard deduction.
New 0.5% AGI Threshold for Itemized Charitable Deductions
Also beginning in 2026, taxpayers who itemize deductions will generally be permitted to deduct charitable contributions only to the extent total annual charitable gifts exceed 0.5% of adjusted gross income (AGI).
This operates somewhat similarly to the historical treatment of medical expense deductions, although at a much lower threshold.
For example:
• Taxpayer AGI: $100,000
• Total charitable contributions: $10,000
• 0.5% AGI threshold: $500
Under this rule, the taxpayer would generally receive an itemized charitable deduction of $9,500, since the first $500 of contributions would not be deductible.
This new threshold applies broadly to itemized charitable deductions, including many cash and non-cash gifts.
Cash Contributions to Charity
Cash contributions remain one of the simplest and most common methods of charitable giving.
For taxpayers who itemize deductions, cash gifts to qualified public charities are generally deductible up to 60% of adjusted gross income (AGI). Amounts exceeding those limits may typically be carried forward for up to five additional tax years.
To substantiate charitable cash contributions:
• Contributions under $250 generally require a bank record or written documentation.
• Contributions of $250 or more require a contemporaneous written acknowledgment from the charity.
Gifts of Appreciated Securities and Other Non-Cash Assets
Many larger charitable gifts involve appreciated assets rather than cash. Common examples include:
• publicly traded stock,
• closely held business interests,
• artwork,
• collectibles,
• real estate,
• cryptocurrency, and
• other investment property.
When appreciated property held longer than one year is donated to a qualified public charity, donors may generally receive two significant tax benefits:
1. A charitable income tax deduction for the fair market value of the asset, and
2. Avoidance of capital gains tax that would otherwise apply if the asset were sold.
For many donors, avoiding the capital gains tax can create a substantial additional economic benefit beyond the charitable deduction itself.
AGI Limitations for Appreciated Property
Contributions of long-term appreciated capital gain property to public charities are generally deductible up to 30% of adjusted gross income (AGI) when deducted at fair market value.
Any unused deduction may typically be carried forward for up to five years.
Additional Rules for Non-Cash Contributions
The IRS imposes additional substantiation requirements for larger non-cash gifts.
Contributions Over $500
Donors contributing more than $500 of non-cash property during the year are generally required to file IRS Form 8283 with their income tax return.
Contributions Over $5,000
For non-cash contributions exceeding $5,000, donors generally must obtain a qualified appraisal prepared by a qualified appraiser.
Exceptions exist for certain publicly traded securities, which generally do not require an appraisal because market quotations establish value.
The charity receiving the gift typically provides a written acknowledgment of the donation but generally does not determine or certify the value of the donated property.
Artwork and Collectibles
Special rules may apply to artwork and collectibles. In certain circumstances, the donor’s deduction may depend on whether the charity’s use of the property is related to its charitable mission or exempt purpose.
Because of the complexity of these rules, donors considering significant non-cash gifts should consult their tax advisors before completing the contribution.
Qualified Charitable Distributions (QCDs)
Qualified Charitable Distributions continue to be one of the most tax-efficient charitable planning tools available for retirees.
Individuals age 70½ or older may currently direct funds from an IRA directly to a qualified charity through a QCD up to $111,000 per year.
QCDs offer several potential advantages:
• The distribution counts toward the taxpayer’s Required Minimum Distribution (RMD).
• The amount transferred to charity is excluded from taxable income.
• The donor does not need to itemize deductions to receive tax benefit.
• Lower AGI may reduce exposure to Medicare premium surcharges, taxation of Social Security benefits, and other AGI-sensitive tax calculations.
Unlike a normal charitable contribution, a QCD does not produce a separate charitable deduction because the distribution is excluded from income in the first place.
For many retirees, QCDs can provide one of the most efficient methods of charitable giving available under current tax law.
Final Thoughts
The charitable giving landscape continues to evolve, particularly with the upcoming changes affecting both itemizers and non-itemizers beginning in 2026.
At the same time, long-standing strategies involving appreciated assets and Qualified Charitable Distributions continue to provide meaningful planning opportunities for donors seeking both philanthropic impact and tax efficiency.
Because the rules surrounding charitable deductions can vary significantly based on asset type, holding period, AGI limitations, substantiation requirements, and individual tax circumstances, donors should consult their tax advisors, such as DWM, before implementing major charitable gifting strategies. This article is intended for educational purposes only and should not be construed as legal or tax advice.