How Do High Earners Give to Charity in 2026 Without Wasting the Tax Break?

Every December, a lot of the executives we work with do the same thing. They pick the causes that matter to them, write the checks, and hand the receipts to their CPA in the spring. It is a good habit. The problem is that the tax code shifted underneath that habit this year, and most people have not noticed.

The 2025 tax law (the One Big Beautiful Bill Act) added two rules that matter for anyone who itemizes. The first is a floor. Your charitable gifts now have to clear 0.5% of your adjusted gross income before any of it counts. With a $1 million AGI, the first $5,000 you give produces no tax benefit, and it is not carried forward.

The second is a cap. If you are in the 37% bracket, which starts at $768,700 for married couples filing jointly in 2026, the value of your itemized deductions, charitable gifts included, is capped at 35%. Put them together and a $50,000 gift that used to save you $18,500 now saves you closer to $15,750. That is the $2,750 gap, repeated every year. Some giving vehicles sidestep these rules almost entirely. Here are the four worth knowing.

With a qualified charitable distribution, or QCD, your IRA custodian sends money directly to the charity, so it never lands in your checking account. Because it never reaches you as income, it lowers your adjusted gross income directly instead of showing up as an itemized deduction. The floor and the cap do not apply. A QCD is worth exactly what it says, dollar for dollar, in a way a check from your bank account no longer is.

One detail people often mix up: you do not need to be at RMD age to use it. QCDs start at 70½, even though required distributions may not begin until 73 or 75 depending on your birth year. That gap is a planning window most people miss, and it is worth knowing for your parents today and your own plan later.

If you are not yet 70½, or you would rather give appreciated stock, the donor advised fund is usually your best tool. You open an account through a sponsor like Schwab Charitable, Fidelity Charitable, or a community foundation, and contribute cash or appreciated stock. You take the deduction the year you contribute, and gifted shares leave their capital gains behind for good. The money stays invested while you recommend grants to qualified charities on your own timeline.

The real move right now is bunching. Instead of giving a little every year and paying the 0.5% floor every year, you put two or three years of planned giving into the fund in one high income year. Think of a big RSU vest, a large option exercise, or a bonus year. You clear the floor once by a wide margin, with deductions allowed up to 60% of AGI for cash and 30% for appreciated securities (IRS Publication 526)has the limits). Then you grant the money out over the following years. We covered the mechanics in more detail in Donor-Advised Funds: The Tax-Smart Way to Give.

We worked with a client, we will call him Dave, a 49-year-old operating executive who had spent a decade with the same company. Between vested RSUs and options he had exercised and held, he had almost $2 million in one stock. Most of it was embedded gain. He knew he was too concentrated, but selling meant a massive capital gains bill in a single year.

A charitable remainder trust is irrevocable, so once you fund it, you cannot undo it. Dave transferred the appreciated stock into the trust, and the trust sold it. Because the trust does not pay capital gains tax on the sale, none of that gain was taxed up front. The trust then pays you income for a set number of years or for life, somewhere between 5% and 50% of the trust value each year. Whatever remains goes to charity, as long as that remainder is projected to be at least 10% of what you put in. You can serve as your own trustee and get a partial income tax deduction today.

For Dave, that meant a path out of a concentrated position without a six-figure tax bill landing in one year, a supplemental income stream as he moved into a less demanding role, and a meaningful charitable legacy. For more on how trusts fit around concentrated stock, see The Modern Trust Playbook for High Earners.

A private foundation is its own legal entity, usually a nonprofit corporation you set up and control. The IRS requires it to pay out at least 5% of its assets to charity every year. This is a tool for control and legacy, and the deduction math is less generous than a donor advised fund: 30% of AGI for cash and 20% for appreciated stock, versus 60% and 30%. You also take on a board, annual filings, and a tax on investment income.

In return, you get direct control over every grant and a vehicle your kids or grandkids can help run. If the goal is the biggest deduction with the least work, the donor advised fund usually wins.

4 Ways Wealthy People Give to Charity Without Wasting the Tax Break

Most coverage of the 2026 changes frames them as a reason to give less. That is the wrong read. The floor and the cap hit one specific behavior: a modest cash gift from your checking account, repeated every year. Every year you give that way, you pay the 0.5% floor again and run into the 35% cap again. Nothing about your generosity changed. What changed is how much the tax code rewards the vehicle you have been using. Change the vehicle and the timing, and the amount you give can stay exactly where it is.

• Over 70½ and charitably inclined: the QCD usually comes first, because nothing else sidesteps the new rules as cleanly.
• A high income year coming from equity comp, a business sale, or a bonus: that is your signal to bunch several years of giving into a donor advised fund.
• A big piece of your net worth in one stock: a charitable remainder trust can solve a diversification problem and a giving goal at the same time.
• Want a family institution you control for decades: the private foundation still works, with eyes open on the tax math.

Charitable structuring is one of the few tax levers W-2 executives actually control, which we walk through in The Boring Tax Strategy Quietly Saving W-2 Executives $100K+ a Year.

This is written for corporate executives in their 40s through 60s with $500,000 or more of household income, complex compensation like RSUs, options, and bonuses, and a giving habit they want to keep without leaving tax benefit on the table. If you itemize, give regularly, or hold a concentrated stock position, this is the exact problem we solve.

At Tailored Wealth, we build your giving strategy the same way we build every other part of your plan: intentionally. Charitable planning sits inside your multi-year tax roadmap, right next to your equity comp calendar, so we can see your high income years coming before they arrive. Through our Quarterly Strategy Rhythm, the review cadence where we revisit your tax, equity, and cash flow plan every quarter, we choose the right vehicle each year, coordinate with your CPA, and time contributions around vests, exercises, and bonuses instead of scrambling in December.

If you want to see how the new floor and cap affect your giving, and which of these four vehicles fits your situation, Book a Free Wealth Strategy Call. We will walk through it with your real numbers so you are not guessing.