Charitable Giving in the Trump Tax Era: What Investors Must Know Before 2026
The sweeping tax changes introduced under President Donald Trump’s “big beautiful bill” have reshaped the landscape for charitable deductions, especially for high-income earners. While the legislation handed out trillions in tax breaks, it also introduced new limitations that will significantly impact how investors and advisors approach philanthropy starting in 2026. Here at Extreme Investor Network, we’re breaking down what these changes mean—and more importantly, what you should be doing now to maximize your tax efficiency.
The New Charitable Deduction Floor and Cap: A Closer Look
Beginning in 2026, taxpayers who itemize their deductions will face two major changes:
- A 0.5% Floor on Charitable Deductions: This means that only the amount of your charitable donations exceeding 0.5% of your adjusted gross income (AGI) will be deductible.
- A Cap on Deductions for Top Earners: For those in the highest tax bracket (37%), the tax benefit from charitable deductions will be limited.
To put this in perspective, imagine you’re in the 37% bracket with an AGI of $1 million. If you donate $100,000 in 2025, you could save $37,000 in taxes. But if you wait until 2026, these new rules effectively reduce your tax savings by about $3,750 on that same donation. This is not just a minor inconvenience; for high-net-worth individuals, that’s a meaningful reduction in tax efficiency.
Why Timing Your Donations Matters More Than Ever
Certified Financial Planner Edward Jastrem and wealth planning expert Justin Miller emphasize the importance of proactive planning in 2025 before the new rules take effect. One of the most effective strategies is “bunching” donations—consolidating multiple years’ worth of charitable gifts into a single year. This can be done efficiently using a donor-advised fund (DAF), which acts like a charitable checking account, allowing you to front-load donations and then distribute funds to charities over time.
Justin Miller points out that many high earners already have DAFs in place, so the key action now is to fund these accounts before year-end 2025 to lock in the more generous deduction rules. This approach is a straightforward way to save thousands in taxes without altering your philanthropic goals.
New Deduction for Non-Itemizers: Small but Noteworthy
Another change starting in 2026 is a new charitable deduction for non-itemizers—those who take the standard deduction. These taxpayers can deduct up to $1,000 (single filers) or $2,000 (married filing jointly) for cash donations. While modest, this provision encourages charitable giving even among taxpayers who don’t itemize, potentially broadening the donor base.
What Should Investors and Advisors Do Differently?
-
Act Now to Maximize 2025 Deductions: If you’re considering charitable giving, accelerate your donations into 2025. Use donor-advised funds to bunch gifts and optimize tax benefits.
-
Review Your Tax Bracket and AGI: High earners should analyze how the 0.5% floor and deduction cap will affect their giving strategies. Consulting with a tax professional to model different scenarios is crucial.
-
Educate Clients and Stakeholders: Advisors should proactively communicate these changes to clients, emphasizing the importance of year-end planning.
-
Monitor Legislative Updates: Tax laws can evolve. Stay informed about potential amendments or new proposals that might affect charitable giving.
What’s Next? A Shift Toward Strategic Philanthropy
Looking ahead, the trend is clear: tax policy is nudging donors to be more strategic and deliberate. The era of simply writing checks year after year without considering timing and tax impact is fading. Investors and advisors who embrace planning tools like donor-advised funds and keep a close eye on income thresholds will gain a competitive advantage.
Did you know? According to a 2023 report from the National Philanthropic Trust, donor-advised funds saw a 12% increase in contributions last year, signaling growing awareness and adoption of these tax-smart giving vehicles.
Final Thought
The changes coming in 2026 are a wake-up call for anyone who values charitable giving and tax efficiency. Waiting until next year to donate could cost you thousands in tax savings. At Extreme Investor Network, we believe that smart, timely planning is the key to turning tax challenges into opportunities. Don’t just give—give smart.
Sources:
- CNBC, “Trump’s tax changes and what they mean for your charitable deductions”
- National Philanthropic Trust, 2023 Donor-Advised Fund Report
- Expert insights from Edward Jastrem, CFP and Justin Miller, Evercore Wealth Management
Stay tuned for more cutting-edge tax and investment strategies tailored for today’s savvy investor.
Source: Trump’s ‘big beautiful bill’ slashes tax break for higher earners