At LCM, we view giving as one of the most rewarding parts of wealth management. Charitable gifts allow our clients to support the causes that matter most to them and create lasting impact for generations. And for many affluent givers, their charitable giving strategy also unlocks valuable tax benefits—allowing them to give more abundantly while sustaining their long-term financial goals.
But the tax landscape is changing. Beginning in 2026, new limits will reshape how deductions are calculated, which gifts qualify, and the overall value of those deductions—especially for families in higher tax brackets. These shifts don’t eliminate the benefits of charitable giving, but they do make timing and strategy more important than ever.
Here’s a quick look at what’s changing and why it matters:
A new ‘floor’ for itemizers…
Among the most notable changes, if you itemize deductions on your tax return, you will no longer be able to write off the full amount of your charitable contributions. Per the new law, the first 0.5% of adjusted gross income (AGI) will be disallowed. Here’s how that looks in the real world:
If your AGI is $400,000 and you donate $20,000 in cash to one or multiple organizations, the first $2,000 (0.5% of AGI) of that total will be disallowed completely. Your total deduction will amount to just $18,000.
However, if your AGI is $400,000 and you contribute twice the amount—$40,000—the same $2,000 floor will apply. Your total deduction in this case will be $38,000.
The new rule also includes non-cash contributions, such as clothing, food, household goods, and appreciated property. If you donate appreciated securities, while you may still see some capital-gains advantages, the charitable deduction tied to those gifts will also be subject to the new floor.
The impact of the change will be felt across the spectrum of giving, with more moderate contributions potentially resulting in no deduction at all, and larger contributions delivering smaller tax benefits than in the past. Note that if you give via a Qualified Charitable Distribution (QCD) from your Required Minimum Distribution (RMD), this amount will not be subject to the new floor. This is because QCDs are not itemized deductions. Instead, they provide a tax benefit by being excluded from your taxable income entirely.
If your wealth enables you to consistently give six or seven figures annually, the impact of this change might feel like a small drop in the bucket. But keep in mind that the new law also dictates that the total value of your itemized deductions cannot reduce your tax bill by more than 35% of the amount deducted—even if you’re in a higher tax bracket.
The new floor will affect givers at every level, eroding the efficiency of mid-sized gifts and complicating how larger gifts will need to be structured year after year. Planning, as always, is key.
Limits on itemizers remain in place…
One thing that has not changed is the AGI ceiling for charitable deductions:
Cash contributions to public charities remain capped at 60% of AGI.
Cash contributions to Donor-Advised Funds (DAFs) or private foundations remain capped at 30% of AGI.
As was the case in the past, excess contributions above those ceilings aren’t lost—they can be carried forward for five years and deducted later. However, beginning in 2026, any amounts that fall below the new 0.5% floor must also be carried forward rather than deducted in the current year.
If you’re among our clients who give abundantly year after year, these contribution limits reinforce the importance of coordinating large gifts with income years to maximize your deductions and prevent carryforwards from expiring unused. Be sure to talk to your advisor before you give so we can plan effectively to ensure your dollars have the greatest impact.
*Note for those taking the standard deduction (often our younger or early-stage clients): 2026 brings a new standard deduction $1,000 (single) or $2,000 (married filing jointly) for charitable deductions, but this applies to cash gifts only—non-cash gifts such as clothing, food, household goods, and appreciated property won’t qualify.
What this means for 2025…
These changes make 2025 the final year to give under the current rules—an important window to consider how and when you give. Larger contributions to a Donor-Advised Fund, for example, can secure today’s full deduction while continuing to support your philanthropy for years to come. Pairing charitable gifts with a Roth IRA conversion may also make sense, since the deduction can help offset the added income.
Of course, giving has always been about more than tax rules. It’s about aligning your wealth with your values and the legacy you want to create. Gideon’s book Giving: A Handbook to Happiness for the Modern Philanthropist was written to help start that conversation, and we’re happy to share a complimentary copy—or the companion workbook—if you’d find it helpful.
Yes, the rules are shifting, but your opportunity to give purposefully and abundantly has not. At LCM, we’re here to design strategies that keep your generosity both meaningful and tax efficient. If charitable giving is among your wealth goals, let’s begin planning now to set the stage for the changes to come.
