By Joe Dowdall, CFP®, RICP®, CRPC®, CCFC, TPCP®
You’ve supported your church or a favorite cause for years, and you’ve probably done it the same way every time. You write a check or click “donate.” For some retirees, that habit is now costing money. The rules for deducting charitable gifts changed for the 2026 tax year, and the check you’ve always written may provide less tax benefit than it did before. Deciding how to give is a financial planning question, and the answer looks different this year.
Why the Way You Give Matters As Much As the Amount
Two people can give the same $10,000 and end up with very different tax outcomes. What separates them is where the money comes from and how it reaches the charity.
Three rules took effect for the 2026 tax year:
- If you take the standard deduction, you can now write off up to $1,000 in cash gifts, or $2,000 if you’re married filing jointly.
- If you itemize, only the giving above 0.5% of your adjusted gross income (your total income before deductions) counts.
- Filers in the top 37% bracket now see their itemized deductions capped at 35 cents on the dollar.
Which rule applies to you determines which method below fits.
The first rule applies to small cash gifts. The second makes bunching and donor-advised funds much more important. None of them affect a QCD, which is outside the deduction system entirely.
Give Appreciated Stock Instead of Cash
If you hold stock in a taxable account that has grown in value, gifting those shares to a charity usually beats selling them and donating the proceeds. You skip the capital gains tax you would have owed on the growth, and you can still write off the full market value, up to 30% of your adjusted gross income. That write-off is still subject to the 0.5% floor, but the capital gains savings isn’t.
The charity gets the same dollars either way. You just keep more of your own money.
Use a Donor-Advised Fund to Control Your Timing
A donor-advised fund is a charitable account you fund now and give away from later. You take the deduction in the year you contribute, then pick the charities on your own schedule.
That flexibility is important in 2026. Because of the new 0.5% floor, small gifts spread across many years can leave you almost nothing to deduct. Combining several years of giving into one contribution, often called bunching, clears both the floor and the standard deduction threshold. Good tax planning decides which year that should be.
Give Directly From Your IRA With a QCD
Once you turn 70½, a qualified charitable distribution (QCD) is often your strongest option. A QCD sends money directly from your traditional IRA to a qualified charity.
Because the money goes straight to the charity, it’s never counted as taxable income for you, yet it still counts toward satisfying your annual required minimum distribution. For 2026, you can give up to $111,000 per person, or $222,000 for a married couple if both spouses have their own IRAs.
Itemized charitable deductions are restricted by both the 0.5% floor and the 35% tax-benefit cap. A QCD avoids those limits entirely because it lowers your adjusted gross income directly, rather than counting as an itemized deduction.
Reducing your overall income this way has a major secondary benefit: it can help lower your Medicare premiums and reduce how much of your Social Security is taxable. Keep one important restriction in mind: you cannot use a QCD to fund a donor-advised fund.
Which Approach Fits Your Situation?
The right method depends on your age and what you own.
- Age 70½ or older with an IRA: Start with a QCD. It sidesteps the new deduction limits altogether.
- Holding stock that has grown a lot: Give the shares themselves rather than cash from a sale.
- Taking the standard deduction: Claim the new $1,000 or $2,000 write-off for cash gifts. Contributions to a donor-advised fund don’t qualify.
- Giving larger amounts and itemizing: Bunch a few years of gifts into a donor-advised fund to get over the 0.5% floor.
Many of the retirees I work with use more than one of these in a year, and the mix shifts as their income does.
Give With a Plan
Generosity is personal. How you route it is a tax decision, and it’s easier to get right when someone is looking at your income and your tax return side by side. If you give regularly and aren’t sure your method still fits the 2026 rules, let’s talk before December.
Get started today with a 15-minute introductory call. I can be reached at (469) 423-1989 or by email at joe@worthassetmgmt.com.
Frequently Asked Questions About Charitable Giving
What is the most tax-efficient way to give to charity?
It depends on your age and what you own. If you’re 70½ or older, a qualified charitable distribution from your IRA is usually the most efficient route, because it lowers your taxable income directly. Donors who aren’t yet 70½ typically find that giving appreciated stock is the most effective approach, as it avoids capital gains tax.
How did the charitable deduction change in 2026?
Three rules took effect for the 2026 tax year:
- Non-itemizers can write off up to $1,000 in cash gifts, or $2,000 filing jointly.
- Itemizers can only deduct giving above 0.5% of adjusted gross income.
- Top-bracket filers have their itemized deduction benefit capped at 35 cents on the dollar.
Can I donate stock to charity to avoid capital gains tax?
Yes. Giving shares you’ve held more than a year directly to a qualified charity means you don’t pay capital gains tax on the growth, and you can still deduct the fair market value of those shares, up to 30% of your adjusted gross income. Selling first gives up that advantage.
How much can I give to charity from my IRA in 2026?
Up to $111,000 per person, or $222,000 for a married couple when each spouse has an eligible IRA. You must be 70½ or older, and the money must move directly from the IRA to the charity. Joe Dowdall helps Dallas-area retirees time these gifts around their required minimum distributions.
About Joe
Joe Dowdall is a fee-only CERTIFIED FINANCIAL PLANNER® professional in Dallas, TX. With over 20 years in the financial services industry, Joe is a fiduciary who creates tax-focused financial plans for people nearing or in retirement—to help them build and safeguard their wealth through all life stages.
The information provided is for educational and informational purposes only. Please consult with a qualified financial and tax professional for advice tailored to your specific financial situation.