29 Jan 2026 The Year to Charitably Give
For most people, the turn of the calendar to a new year brings many thoughts of goals and aspirations. But if you’re in the financial world, you start to think about tax law changes that are applicable for the year. We had several briefs last year on the changes from the One Big Beautiful Bill Act (or OBBBA as some call it), like Ellen’s summary. In that brief, she touched on one of the negative changes if you itemize related to a charitable floor.
Today I wanted to focus on a positive change that came from the OBBBA: the ability for people that take the standard deduction to receive an additional deduction for cash donations.
- Looking Back: Historically, outside of a few unique COVID years, you could not deduct your charitable giving unless you itemized. This meant for example that you could conceivably give $10k+ and your tax situation was no different than someone that gave $0. According to the Tax Policy Center, only about 10% of taxpayers itemized in the tax year for 2022. This means that a lot of people likely charitably gave with no additional deduction to show for it.
- What Changed? Beginning in 2026, taxpayers can deduct up to $1,000 (single) or $2,000 (joint) of cash contributions to a qualified operating charity. This gift must be made with cash (credit/debit works), so you cannot use appreciated securities or a donation to a Donor Advised Fund for this deduction. Depending on your tax bracket, this could be a deduction equivalent to $100-700+ if you made the max donation!
A few quick thoughts on how to take advantage of this tax code change:
- Identify a charity you want to give to. This is the most exciting step. You likely already have nonprofits you would like to support, but if not, my advice would be to start local. What are organizations that you see doing good work? What are hobbies or interests that you have? What needs do you see around you? What causes are your friends passionate about? There are so many nonprofits that would love your support.
- Make your gift and get a tax receipt. Most nonprofits make it abundantly clear on their website how you can donate to their cause. It is often easy these days to make a gift and receive a receipt right away. You can store it away with your tax documents for when you file next year.
- In 2027, when you file your taxes, be sure to remember your gift. You can give your gift receipt to your CPA or remember to input it into your tax software if you file yourself.
We at Beacon are always excited to talk to clients about implementing charitable giving strategies in their financial plans. Each one of us in the office could share a story of how someone’s gift made a difference in their community. There are many reasons to give, but starting this year, there is one additional financial reason it makes sense to give. Let us know how we can help.
The content above is for informational and educational purposes only. The links and graphs are being provided as a convenience; they do not constitute an endorsement or an approval by Beacon Wealthcare, nor does Beacon guarantee the accuracy of the information.
