Giving Machines debut on Giving Tuesday in Virginia
People can donate to six local and global charities at the Giving Machines in Ballston Quarter. This is the first time Giving Machines is coming to Virginia.
Fox – 5 DC
We’re approaching the end of the year, the traditional time for gift-giving, but before you open your wallet, you should know how the tax system is changing to help you make the most of your gifts.
Thanks to President Donald Trump’s tax and spending policies, 2026 will see the biggest change to the charity tax deduction in nearly a decade. The new rules affect both itemizers and non-itemizers, but in different ways. Depending on which one you are, financial experts have different advice on how to handle your charitable giving this year and next.
Experts say itemizers should fast-forward to giving gifts this year, while non-itemizers may want to pause until 2026 to maximize their deductions.
“This is important, and many clients end up wanting to talk even if they come to us to talk about something else,” said Jane Ditelberg, senior vice president and director of tax planning at Northern Trust Institute. The tax code “has very specific advice on this compared to others”.
What changes for item creators who make charitable donations?
For those who itemize their deductions, 2026 begins two big changes. It is as follows:
- 0.5% Adjusted Gross Income (AGI) Floor: Only charitable contributions that exceed 0.5% of a taxpayer’s AGI are deductible. This applies to all taxpayers, not just the wealthy. For example, if your AGI is $200,000, your first $1,000 contribution is not tax deductible.
- 35% Deduction Cap: Tax benefits from all itemized deductions (not just charitable contributions) for taxpayers are limited to the 35% tax rate for those in the top 37% tax bracket. This means that a high earner who donates $10,000 will receive a $3,500 tax break instead of the $3,700 they would receive at current tax rates.
What changes for those who do not list items?
Starting next year, around 90% of filers who take the standard deduction instead of itemizing will be able to claim a deduction for charitable contributions, according to IRS data.
- Deductions above the limit: Non-itemizers can claim a cash contribution deduction of up to $1,000 for single filers and $2,000 for married couples filing jointly.
Note: Only cash donations are deductible, and amounts are not adjusted annually for inflation.
This new deduction is similar to the one-time deduction of $300 for individuals and $600 for non-item filers and joint filers that helped increase small donor giving during the 2020 and 2021 COVID-19 pandemic. More than 42 million additional taxpayers claimed the deduction, resulting in an approximately $11 billion increase for charities in 2020, according to IRS income statistics data. According to the Fundraising Effectiveness Project, gifts under $250 increased by 15.3% in 2020 compared to 2019, while gifts of $300, the exact amount of the deduction, jumped 28%.
When should taxpayers make gifts to maximize their deductions?
Experts say item creators can avoid a new floor in 2026 by donating more this season. Donors who give this year will receive a tax deduction on their entire charitable gift, not just the portion above 0.5% of AGI.
Experts say wealthy donors may consider bundling their contributions over two years in 2025 to avoid the cap on all itemized deductions they claim being lowered from 37% to 35%.
To illustrate how much a taxpayer could save in taxes, let’s say a high-income individual filer with an AGI of $1 million contributes $20,000.
- 2026: $5,000 is not deductible due to the 0.5% AGI floor. The remaining $15,000 contribution receives a tax benefit of only 35%, or $5,250.
- 2025: A full donation of $20,000 will receive a 37% tax-advantaged tax rate, or $7,400.
Experts said non-itemizers should consider the opposite and wait until 2026 to contribute cash to get the deduction. Donations in 2025 are not tax deductible.
How can you accelerate your giving with Itemizer in 2025?
Experts said that besides writing one big check, statement preparers might consider:
- Donor Advised Fund (DAF): Donors can contribute any amount to a DAF, receive an immediate tax deduction, and use the DAF money for long-term contributions. Funds can also be invested for growth. “This is a good option for people who don’t want to hand over four times as much money to an organization right now,” said Claudia Gonzalez, principal in Kaufman Rossin’s tax advisory group. “You’ll be able to pay it back over three to seven years.”
- foundation: A private foundation must be established and a certain amount of money must be disbursed each year. This is an option for those who want complete control over their giving, but it’s usually more expensive to set up and operate.
- clean house: Cash is not the only type of charitable donation that can be deducted. The same goes for property and goods. “Yes, clean out your house and donate all the things you wanted to get rid of,” Gonzalez said. “It’s not just from a tax and economic standpoint, it’s a cleansing effect. The same goes for if you have college students or elderly family members. It can be cleansing.”
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
