The New 2026 Charitable Giving Rules, and Four Ways High Earners Can Give Smarter

Written by Dan PasconeSeptember 28, 2026

TL;DR

Two new rules that kicked in this year make writing a check to charity less valuable for high earners, but four alternative giving vehicles can help you sidestep them almost entirely.

A new 0.5% AGI floor means the first slice of every cash gift no longer counts as a deduction, and it's gone for good, not deferred or carried forward.
A 35% cap on itemized deductions for anyone in the 37% bracket cuts the value of every dollar you give above that floor.
Qualified charitable distributions, donor-advised fund bunching, charitable remainder trusts, and private foundations each sidestep these rules in a different way, depending on your age, your income year, and whether your wealth is concentrated in one stock.

Key Takeaways

If you're 70½ or older, a qualified charitable distribution is usually the first tool to reach for since it reduces your AGI directly and never touches the new floor or cap.
If you have a high-income year coming from equity comp, a bonus, or a sale, bunching two or three years of giving into a donor-advised fund clears the floor once instead of every year.
If a big piece of your net worth is sitting in one concentrated, low-basis stock, a charitable remainder trust can diversify out of it and create an income stream without an immediate capital gains hit.
A private foundation offers family control and legacy at the cost of a lower deduction ceiling and real administrative work.

What Changed: The New Floor and the New Cap

Two rules kicked in this year that matter specifically for high earners who itemize. The first is a floor: your charitable gifts now have to clear 0.5% of your adjusted gross income before any of it counts as a deduction. If your AGI is $1 million, the first $5,000 you give this year gets you no benefit on your return. It's not deferred, it's not carried forward, it's just gone.

The second is a cap. If you're in the 37% bracket, which starts at just over $768,000 for a married couple this year, the value of your itemized deductions, including charitable contributions, is now capped at 35%. A $50,000 gift that used to save $18,500 now saves closer to $15,750 once the floor and the cap are both factored in. That's real money, every year, for as long as you keep giving the same way.

None of this means you should give less. It means the vehicle you use to give matters more than it used to, because some tools sidestep the new rule almost entirely, and some are actually more valuable than they were last year.

The Qualified Charitable Distribution: Still the Cleanest Tool After 70½

If you're over 70½, this is usually the first tool worth reaching for. Mechanically, it's simple: you instruct your IRA custodian to send money directly to the charity, so it never lands in your checking account first. Because it never touches your hands as income, it never shows up as an itemized deduction at all. It simply reduces your adjusted gross income directly, which means the new floor and cap don't apply, because there's no deduction being claimed in the first place. A QCD this year is worth exactly what it says it is, dollar for dollar, in a way a check from your bank account no longer is.

Donor-Advised Funds and the Power of Bunching

If you're not yet 70½, or you want to give appreciated stock from a brokerage account instead of cash from an IRA, a donor-advised fund becomes your best tool. You open an account through a sponsoring organization, think Schwab, Fidelity Charitable, or a community foundation, and contribute cash or appreciated stock. You get your deduction the year you contribute, and if it's appreciated stock, you eliminate the embedded capital gains for good. The money sits in the account and can be invested for growth, and you recommend grants out to IRS-qualified charities whenever you want. You've technically given up legal ownership of the assets, but you keep advisory privileges, so you still control where the money eventually goes. Our guide to donor-advised funds as a tax-smart way to give and our high earner's DAF playbook both go deeper on setting one up.

The real power move right now is called bunching. Instead of giving smaller amounts every year and eating that 0.5% floor annually, you take two or three years of planned giving and drop it into the fund in one high-income year, maybe the year of a big RSU vest, a large option exercise, or a bonus that pushes you into the top bracket anyway. Our piece on fixing the bonus and RSU tax surprise covers how to spot that kind of year before it arrives. You clear the floor by a wide margin that year and get a fair-market-value deduction up to 60% of AGI for cash and up to 30% for securities, then take your time granting the money out over the following years. Each deduction happens once, in the year you want it, and the giving happens on a schedule you control.

Charitable Remainder Trusts for Concentrated Stock Positions

This tool matters most when a big piece of your net worth is sitting in one stock. We'll call him Dave: 49 years old, an operating executive who'd spent a decade with the same company. Between vested RSUs and exercised options he'd held onto, he had almost $2 million sitting in a single stock position, most of it embedded gain. He knew he was too concentrated, but selling meant a massive capital gains hit in one year.

A charitable remainder trust is an irrevocable trust, meaning once you fund it, you can't undo it. You transfer the appreciated stock into the trust, the trust sells it, and because the trust doesn't pay capital gains tax on the sale, none of the gain gets taxed immediately. The trust then pays you an income stream, somewhere between 5% and 50% of the trust value annually, for a set number of years or for life, and whatever's left goes to charity at the end, as long as the remainder is projected to be at least 10% of what you originally put in. You can even serve as your own trustee, retaining a say in how the trust assets are invested while you receive that income, and you get a partial income tax deduction today based on the present value of the future gift.

For Dave, that meant exiting a concentrated position without a six-figure tax bill hitting him in one year, creating a supplemental income stream during his transition into a less demanding role, and locking in a meaningful charitable legacy, all from stock that had been doing nothing but sitting there as risk. It's not a strategy you back into by accident. It's a plan you build years before you need it.

Private Foundations: Control and Legacy, at a Cost

For a smaller group, there's the private foundation: its own legal entity, usually a nonprofit corporation you set up and control. Once it's funded, the IRS requires it to pay out at least 5% of its assets to charities each year, whether or not you personally give anything new that year. This is a tool for control and legacy, not for maximizing your deduction. The deduction limits are lower than a donor-advised fund's, 30% of AGI for cash and 20% for appreciated stock instead of 60% and 30%, and you take on real administrative work: a board, annual filings, and a tax on investment income. What you get in exchange is direct control over every grant and a vehicle your kids or grandkids can participate in, even sit on the board of. If a family institution you run for decades matters more than maximizing today's deduction, it's still worth considering, going in with clear eyes about the trade-off. Our piece on what actually controls your money after you're gone covers a similar control-versus-simplicity trade-off in estate planning.

What Most People Miss

Most people assume qualified charitable distributions only become available once required minimum distributions start, at age 73 or 75 depending on your birth year. That's not true. You can start using QCDs at 70½, years before your RMDs kick in. If you're charitably inclined and sitting in that gap between 70½ and your RMD age, that's a real planning window most people miss entirely, and one of the few moves here with no downside now that the floor and cap have reduced the value of straightforward cash giving.

How to Match the Tool to the Year You're Having

None of these four tools is about picking a favorite and using it forever. They're about matching the right vehicle to the year you're actually having. - If you're over 70½ and charitably inclined, the QCD usually comes first, because nothing else sidesteps the new rules as cleanly. - If you've got a high-income year coming, from equity comp, a business sale, or a bonus, that's a signal to bunch multiple years of giving into a donor-advised fund instead of spreading them out. - If a big piece of your net worth is sitting in one concentrated stock position, a charitable remainder trust can solve a diversification problem and a giving goal at the same time. - If what you want is a family institution you control for decades, the foundation is still on the table, you just go in knowing the deduction math today is less favorable.

Who This Is For

This is for high-earning executives who give consistently, whether through payroll, checks, or appreciated stock, and haven't revisited how they give since this year's rules took effect. If you're sitting on RMD-age IRA assets, a concentrated equity position, or a high-income year on the calendar, the vehicle you choose this year has a real, calculable effect on what your giving actually costs you.

Frequently asked questions

Do I need to give less because of the new charitable deduction rules?

No. The floor and cap change how much of a given gift is deductible, not how much you should give. Most high earners can give the same amount and land in roughly the same place financially by choosing a vehicle, a QCD, a bunched donor-advised fund gift, or a charitable remainder trust, that sidesteps the new rules instead of running straight into them. If you want help figuring out which fits your situation, a free Wealth Strategy Call is a good place to start.

What is the new AGI floor for charitable deductions, and how does it work?

Starting this year, your charitable gifts have to clear 0.5% of your adjusted gross income before any of it counts as an itemized deduction. On a $1 million AGI, that's the first $5,000 given each year that produces no tax benefit at all. It isn't carried forward to a future year, so a single large gift clears it more efficiently than the same amount spread across several smaller gifts.

Can I use a qualified charitable distribution before I'm required to take RMDs?

Yes. QCD eligibility starts at 70½, which is often several years before your required minimum distributions begin at 73 or 75, depending on your birth year. If you're charitably inclined during that window, QCDs are available even though nothing is forcing a distribution yet.

What's the difference between a donor-advised fund and a private foundation?

A donor-advised fund is administratively simple, you contribute through a sponsoring organization and recommend grants, with higher deduction limits (60% of AGI for cash, 30% for securities) but less direct control. A private foundation is its own legal entity you run yourself, with lower deduction limits (30% and 20%) and real administrative overhead, a board, filings, and a tax on investment income, but it gives you direct control over every grant and a structure your family can run together.

How does a charitable remainder trust help if my wealth is tied up in one stock?

A CRT lets you transfer appreciated, concentrated stock into an irrevocable trust that sells it without triggering an immediate capital gains hit, then pays you an income stream for a term of years or for life before the remainder goes to charity. It's one of the few tools that solves a concentration risk problem and a charitable giving goal in the same transaction, which is why it tends to matter most for executives sitting on a large, low-basis equity position.

Ready to Build a Giving Strategy That Matches the Year You're Having?

If today's rules changed the math on how you've been giving, that's exactly the kind of question a free Wealth Strategy Call is built for. We'll walk through which of these tools fits your specific situation, your age, your income year, and where your wealth is concentrated, so you're giving intentionally instead of by default.

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