A personal take on charitable giving & tax strategy
This time of year always pulls me back to why we give in the first place. It’s not because of a line on a tax return — it’s because something in us wants to make life lighter for someone else. I’ve seen seasons in my own life where giving stretched me, surprised me, and even redirected me. And every single time, the impact had nothing to do with taxes.
But here’s the twist: charitable giving is one of the most overlooked ways to reduce your tax bill — even when you’re not itemizing. The key is remembering that generosity comes first. The deduction is just the polite guest that tags along.
Let’s break this down in plain English for both high earners and everyday families.
Why We Give (and Why the IRS Happens to Reward It)
When I look back at the moments I gave the most — whether it was money, time, or stepping into someone’s crisis — I wasn’t thinking about deductions. I was thinking about impact. I was thinking about people.
The tax code isn’t a moral compass, but it does acknowledge generosity. And if you’re already giving, you might as well steward it wisely.
How Charitable Contributions Reduce Taxes — And What’s Changing in 2026
1. How the IRS Handles Charitable Deductions Right Now
There are two main paths:
A. If You Itemize
When your itemized deductions exceed the standard deduction, itemizing reduces your taxable income.
Current IRS contribution limits generally allow you to deduct:
- Cash gifts: up to 60% of your adjusted gross income (AGI)
- Appreciated stock or crypto: up to 30% of AGI
- Certain private foundations or donor-advised funds: typically 20–30% of AGI
If you give more than the limit, you can usually carry the excess forward for up to five years.
B. If You Take the Standard Deduction
Most Americans fall into this category. Historically, that meant charitable giving didn’t change your tax bill at all.
But that won’t be the case starting in 2026.
2. The Big News: Changes Coming in 2026
For Non-Itemizers (Standard Deduction Filers)
Starting in 2026, taxpayers who take the standard deduction will still be able to deduct a limited amount of charitable giving:
- Up to $1,000 of eligible cash charitable giving (Single)
- Up to $2,000 (Married Filing Jointly)
This is a meaningful shift and a win for everyday givers who don’t have enough deductions to itemize but still give consistently.
For Itemizers
Two important rules begin in 2026:
a. New 0.5% AGI Floor
Your charitable contributions only become deductible for the amount that exceeds 0.5% of your AGI.
Example: If your AGI is $200,000, then the first $1,000 of charitable gifts won’t count toward your deduction. Amounts above that threshold can still be deductible, subject to the usual percentage limits and rules.
b. High-Income Benefit Cap
For top-bracket taxpayers, the tax benefit of charitable giving is capped so the deduction can’t reduce your taxes by more than a set percentage of the gift, even if your marginal tax rate is higher. In other words, large gifts can still be powerful, but the tax savings won’t increase without limit as income rises.
These rules don’t diminish the value of generosity — they simply make planning more important, especially for high earners and large givers.
How Itemizing Benefits You Today (A Simple Example)
If your itemized deductions beat the standard deduction, you get the higher amount and lower your taxable income.
Example:
- You give $10,000 to qualified charities
- Your total itemized deductions add up to $35,000
- The standard deduction for your filing status is around $30,000
Your generosity is what pushes you into itemizing — and that’s what lowers your tax bill.
For higher-income households, donating appreciated assets (like stock) can avoid capital gains and generate a deduction. It’s one of the most tax-efficient ways to give.
How Giving Helps Even If You Take the Standard Deduction
Just because you don’t itemize doesn’t mean your generosity is “tax neutral.” Here are two real-world strategies that can still make a difference.
a. Qualified Charitable Distributions (QCDs)
If you’re 70½ or older, giving directly from your IRA can be one of the most effective ways to give.
- The distribution never becomes taxable income
- It counts toward your Required Minimum Distribution (RMD)
- It works even if you take the standard deduction
This is a powerful planning tool for retirees and is often overlooked.
b. Donor-Advised Funds (DAFs)
Donor-advised funds allow you to:
- Make a larger contribution in one year
- Receive the deduction in that year
- Distribute the money to charities over time
DAFs are ideal for high earners, business owners, or anyone with fluctuating income who still wants their giving to be intentional and aligned with their values.
What This Means for Real People
Generosity isn’t a high-income luxury — it’s a posture. And the tax benefits meet you wherever you are:
- A family earning $60–70k who tithes faithfully
- A retired couple using QCDs to support causes they care about
- A high-income professional donating appreciated stock or funding a donor-advised fund
- A single parent giving $20 a month because that’s what they can do right now
Every one of these choices is generosity. And every one can reduce taxes — some in quiet ways, some in significant ways.
My Honest Take (From Life, Not a Textbook)
Generosity has shaped me more than any deduction ever has. It clarifies what truly matters, reorders priorities, and has a way of softening you and strengthening you at the same time.
Here’s the truth: if you’re already giving from the heart, don’t ignore the tax strategy. Stewardship is part of generosity too.
Give because it matters.
Plan because it’s wise.
Deduct it because the IRS lets you.
A Timely Note for Year-End Givers
If year-end giving is part of your rhythm, now is the perfect moment to check whether you’re making the most of what the IRS allows — especially with the 2026 changes on the horizon.
If you’d like help thinking through QCDs, itemizing, donor-advised funds, or how your giving fits into your broader tax and financial picture, my team and I would be glad to walk with you.
Click here to schedule a consultation with J&S Moore Financial Group.
Generosity leads. The tax benefit just follows along politely.
