Charitable giving under the new tax law: Why planning matters more than ever

For many business owners and families, charitable giving is an important part of supporting the causes and organizations that matter most to them. Following the passage of the One Big Beautiful Bill Act last year, however, many taxpayers are now reconsidering how charitable contributions fit into their broader tax planning strategy.

While the new law changes some of the rules around charitable deductions beginning in 2026, charitable giving remains a valuable and tax-advantaged planning tool. For many taxpayers, the impact of the changes may be smaller than initially expected, particularly when charitable giving is approached strategically.

What Changed

Beginning in 2026, taxpayers who itemize deductions will face a new limitation on charitable deductions. Under the new rules, the first 0.5% of adjusted gross income (AGI) contributed to charity each year will no longer be deductible.

A taxpayer with an AGI of $500,000, for example, would not receive a deduction on the first $2,500 of charitable contributions. Contributions above that threshold generally remain deductible. The change primarily affects taxpayers who itemize deductions. Existing AGI limitations on charitable contributions still apply, and excess contributions may still be carried forward under current rules.

Why Planning Matters More Now

The new rules do not eliminate the benefits of charitable giving, but they do make timing and coordination more important. Rather than approaching charitable contributions as a year-end decision, many taxpayers may benefit from integrating charitable planning into broader conversations about income, investments, retirement, and business transitions.

For business owners and households with fluctuating income, more intentional planning can help preserve much of the tax efficiency associated with charitable giving while continuing to support organizations and causes over time.

Donor-Advised Funds and “Bunching” Contributions

One strategy receiving increased attention under the new law is “bunching” charitable contributions into a single tax year rather than spreading gifts evenly year to year. Donor-advised funds (DAFs) can play an important role in this approach.

A DAF allows taxpayers to make a larger charitable contribution in one year, exceed the new deduction floor more meaningfully, and take the tax deduction in the year the contribution is made. Funds can then be distributed to charitable organizations over time through grants. For taxpayers experiencing high-income years, business transactions, liquidity events, or retirement transitions, this flexibility may provide additional planning opportunities.

Donating Appreciated Stock

Donating appreciated securities instead of cash remains another effective charitable planning strategy. When publicly traded stock held for more than one year is donated to a qualified charity, taxpayers may avoid paying capital gains tax on the appreciation while potentially deducting the fair market value of the asset, subject to applicable AGI limitations. For individuals with taxable investment accounts, this strategy can support charitable goals while also helping manage the tax impact of portfolio rebalancing or diversification.

Qualified Charitable Distributions Continue to Provide Benefits

Qualified charitable distributions (QCDs) from IRAs remain one of the most effective charitable planning tools available for taxpayers age 70½ and older. A QCD allows funds to be transferred directly from an IRA to a qualified charity.

These distributions may count toward required minimum distributions (RMDs) while also being excluded from taxable income entirely. Because QCDs do not increase adjusted gross income, they may also help taxpayers manage tax brackets, Medicare premium thresholds, and the taxation of Social Security benefits.

A More Intentional Approach to Giving

Under the new tax law, charitable planning increasingly depends on aligning giving strategies with income levels, investment positions, retirement planning, and broader financial goals. In many cases, the objective is not necessarily to change how much someone donates, but rather to structure charitable contributions in a way that maintains thoughtful giving while minimizing unnecessary tax consequences.

As taxpayers prepare for the new rules taking effect in 2026, proactive planning can help preserve flexibility and maximize the long-term impact of charitable giving. Now is a good time to talk with a Kernutt Stokes advisor or your tax professional about how charitable giving fits into your broader financial and tax planning strategy.

About the Author

Eugene native Tiffany K. Nash, CPA, is partner-in-charge of tax at Kernutt Stokes. With more than 25 years of experience, she works closely with privately held and family-owned businesses on tax planning and financial strategy. In 2026, she was named to Forbes’ Best-in-State CPAs list that uses peer nominations and independent review by an advisory board to recognize leading professionals for their expertise, leadership, and contributions to the accounting profession.

Additional Resources

Read more about the One Big Beautiful Bill Act and charitable planning strategies.

Read more about the approaches to consider as you plan your charitable giving.

Watch a video on charitable tax deductions and planning considerations under the new law.

Learn more about Tiffany K. Nash, CPA, including recently being named to Forbes’ 2026 Best-in-State CPAs list.

Visit KernuttStokes.com for additional tax planning resources and insights.

Oregon’s Award-Winning Expertise: Kernutt Stokes Helps Individuals and Businesses Maximize the Impact of Charitable Giving

For more than 80 years, Kernutt Stokes has been a cornerstone of accounting and business consulting in Oregon. As the state’s fourth-largest CPA firm with offices in Eugene, Bend, Corvallis, and Lake Oswego the firm empowers privately held and family-owned businesses across key sectors like construction, manufacturing, transportation, beverage, and agribusiness.

Kernutt Stokes’ team of 12 partners and 75 accounting professionals offers a full spectrum of services, from core accounting and virtual accounting to 401(k) administration, retirement planning, and strategic business consulting. The firm is proud to be recognized for its exceptional workplace culture (Oregon Business magazine’s “100 Best Companies to Work For” in 2026, 2025, 2023, 2021; “Best Place for Working Parents” in 2025) and industry leadership (INSIDE Public Accounting’s top 50 accounting firms, 2025 and 2022). Kernutt Stokes is an independent member of BDO Alliance USA, dedicated to delivering superior client service. Businesses can discover how the rm can help them thrive at KernuttStokes.com.