Carefully considering what to give and when to give it can increase the impact of your gifts while helping you meet personal priorities as well.
As the end of the year approaches, many pause to review, reflect, and plan. Thoughtfully addressing your charitable giving priorities between now and the end of the year can help assure maximum benefits for you and your charitable interests.
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Federal tax laws and those of many states make it possible to reduce or eliminate taxes on funds you give for charitable purposes. Beginning in 2026, most donors can receive a federal tax benefit for charitable gifts whether or not they itemize deductions. Because charitable gifts reduce the amount otherwise subject to federal income tax, you may be able to give more than you thought possible.
The amount and timing of your charitable gifts are totally within your control. This is why each year millions of Americans take advantage of the opportunity to make charitable gifts while also reducing their tax liability.
Federal tax legislation enacted in July 2025 made several changes to the charitable giving rules that took effect on January 1, 2026.
If you take the standard deduction, you may now deduct up to $1,000 ($2,000 for married couples filing jointly) of cash gifts made directly to qualifying charities, including churches. Gifts to donor advised funds and private foundations do not qualify for this deduction.
If you itemize, only the portion of your charitable gifts that exceeds 0.5% of your adjusted gross income (AGI) is deductible. For example, a household with $200,000 of AGI receives no deduction for its first $1,000 of gifts. Combining several years of planned giving into a single year (often called "bunching") can help reduce the effect of this floor.
For taxpayers in the 37% federal income tax bracket, the tax benefit of itemized deductions, including charitable gifts, is now generally limited to 35 cents per dollar.
If you itemize, you can deduct cash gifts to public charities of up to 60% of your adjusted gross income, a limit Congress has now made permanent. If you do not itemize, the new deduction for non itemizers described above may apply to you.
All gifts must be mailed (postmarked) or otherwise delivered by December 31, 2026, to qualify for a 2026 deduction.
Contributions that exceed the annual limit can generally be carried forward for up to five years. Remember, the higher your tax bracket, the more you save.
Gifts of property such as stocks, bonds, mutual funds, and other appropriate assets that have increased in value since you have owned them can benefit you in other ways. If you have held such assets for longer than a year, you can generally donate them and deduct their current value, including any "unrealized gains," from your taxable income.
Congress has provided that in addition to regular tax savings, you do not have to pay capital gains tax on most appreciated assets given to charity. This additional tax savings is one reason why some people choose to make their gifts in this way.
Gifts of appreciated assets are generally deductible up to 30% of your adjusted gross income, with any excess carried forward for up to five years. Please note that the new deduction for non itemizers applies to cash gifts only, so the income tax deduction for gifts of appreciated assets is available only if you itemize; however, you still avoid the capital gains tax either way.
The assets that are best to give are those that have increased the most in value and would result in the greatest capital gains tax if sold. Many also choose to give low yielding assets, resulting in little or no impact on future spendable income.
If you have investments that have decreased in value since you've owned them, consider selling them and making a deductible gift of the cash proceeds. This creates a loss that you may be able to deduct from other taxable income (subject to the normal capital loss limits) along with your cash contributions. The amount of your deductible loss combined with the charitable deduction may actually amount to more than the current value of the donated asset.
When making a gift of securities, check with your financial services provider to ensure that it is transferred properly and in a timely manner. You should allow additional time for gifts of mutual fund shares or securities that are not publicly traded. We will be pleased to assist in this process.
If you are age 70½ or older, you may give up to $111,000 in 2026 (up from $108,000 in 2025) directly from your Individual Retirement Account (IRA) to charity through a Qualified Charitable Distribution (QCD). Married couples may each give up to this amount from their own IRAs. Because QCDs are excluded from your taxable income entirely, they:
A one time QCD of up to $55,000 may also be used to fund a charitable gift annuity or charitable remainder trust.
QCDs must be transferred directly from your IRA custodian to the charity and cannot be made to donor advised funds or private foundations, so please speak with your financial services adviser to ensure the transfer is completed properly and by December 31.
Giving in this way assures that these funds will never be subject to income or estate tax, which may make it possible to give more at the same or lower cost than in the past.
Toward the end of each year, many people also review their long range estate and financial plans. Wills, life insurance policies, retirement accounts, and other planning vehicles can offer exceptional opportunities for leaving a lasting legacy to charitable interests.
Naming a charity as a beneficiary of a retirement account can be especially efficient, since those funds would otherwise be subject to income tax when inherited by family members. There are also ways to provide for meaningful future gifts while generating income, immediate income tax savings, and other benefits today.
Gifts must be mailed (postmarked) or otherwise delivered by December 31, 2026, to qualify for a 2026 deduction. If you are planning a gift of securities or an IRA distribution, begin early in December so the transfer can be completed by year end.
Yes. Beginning in 2026, if you take the standard deduction you may deduct up to $1,000 ($2,000 for married couples filing jointly) of cash gifts made directly to qualifying charities, including churches. Gifts to donor advised funds and private foundations do not qualify.
If you are 70½ or older, you may give up to $111,000 directly from your IRA through a Qualified Charitable Distribution. The gift is excluded from your taxable income, can count toward your required minimum distribution, and must be transferred directly from your IRA custodian by December 31.
Yes. Appreciated assets you have held longer than a year can generally be donated and deducted at their current value if you itemize, and you avoid capital gains tax either way. Use the Transfer Securities or Assets form to get started and we will be pleased to assist.
Call Legacy Church at 505-831-0961 and we will be glad to help. Your accountant or other advisors can provide you with more information specific to your needs.
As the year draws to a close, act now to make certain you have accomplished your charitable goals for 2026. Remember that time spent deciding what, when, and how to best make your gifts can result in maximum tax savings and other financial benefits.
If you are planning a gift of securities or an IRA distribution, please begin early in December to allow time for the transfer to be completed by year end.
Please contact us if we can be of assistance in any way.
505-831-0961Your accountant or other advisors can provide you with more information specific to your needs.
The purpose of this publication is to provide general gift, estate, and financial planning information: it is not intended as legal, accounting, or other professional advice. For assistance in planning charitable gifts with tax and other financial implications, the services of appropriate advisors should be obtained. Consult an attorney for advice if your plans require revision of a will or other legal document. Tax deductions vary based on applicable federal discount rates, which can change on a monthly basis. Some opportunities may not be available in all states.
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