If you are planning to make a major gift, the tax savings could be greater if you make your gift this year rather than next. This is because of two changes made by recently enacted tax legislation, which will become effective in 2026.

First, if you make your gift in 2026 or ensuing years and you itemize your deductions, the new legislation requires that you give 0.5% of your income before you get any charitable deduction. Second, if you are in the top 37% tax bracket, you can claim only a 35% tax deduction for charitable gifts instead of the full 37%.

Example: In 2026 Roger, who is in the 37% tax bracket, contributes $100,000 to our organization. His income that year is $600,000. The deduction he can claim is $97,000, which is calculated as $100,000 - (0.5% x $600,000).

If he makes the gift this year, his tax savings will be $100,000 x 37%—which equals $37,000. If he makes the same gift next year, his tax savings would be only $33,950 ($97,000 x 35%). Thus, by acting in 2025 rather than delaying his gift until next year, he increases his tax savings by $3,050.

If you are planning to make more modest-sized charitable gifts and you will not itemize your deductions because they total less than the standard deduction you can claim, you will save taxes from gifts made in 2026 but not those made in 2025. That is because the new tax legislation allows a limited deduction for non-itemizers starting in 2026. That limit is $1,000 for a single taxpayer and $2,000 in the case of a married couple filing jointly.

Example: Donna and Alan in 2025 contribute charitable gifts totaling $5,000, and they claim the standard deduction. Although their gifts are valued for what they accomplish, they do not result in any tax savings for Donna and Alan. However, if they make comparable gifts in 2026, they can add $2,000 to their standard deduction. Given their 22% tax bracket, this will result in tax savings of $440. Due to the tax savings, they may be able to increase their total giving.

If you would like to learn more about how to maximize your benefits while also making a charitable gift to support our work, please contact our office.