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DEEPYIELDTAX STRATEGIES

Charitable Giving Under the 2026 Rules: Bunching, Donor-Advised Funds and Gifts of Stock

Short answer: Starting with tax year 2026, Public Law 119-21 changes charitable deductions in three ways. Itemizers deduct gifts only to the extent they exceed a floor of one-half of one percent (one two-hundredth) of their contribution base (section 70425). Itemized deductions are reduced for people whose taxable income, figured with those deductions added back, reaches the top rate bracket (section 70111). People who don't itemize can deduct some cash gifts again, but gifts to donor-advised funds don't count (section 70424). Those changes make the year a gift is made, and how it's made, matter more. This page covers what to check: bunching, donor-advised funds, gifts of stock, IRA distributions to charity, and the records the IRS requires.

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1. What changed for 2026

All three provisions apply to tax years beginning after December 31, 2025. The 2026 forms and instructions weren't final when this page was written, so the descriptions here follow the enacted text and the IRS provisions page. The publications cited below are the 2025 editions, which describe the rules before these changes.

  • A floor for itemizers (section 70425). New section 170(b)(1)(I) says a charitable contribution "shall be allowed only to the extent that the aggregate of such contributions exceeds" a floor of one two-hundredth of the taxpayer's contribution base. The contribution base is adjusted gross income figured without any net operating loss carryback. The statute applies the floor to the most limited kinds of gifts first, starting with capital gain property given to organizations outside Publication 526's first category, and to cash gifts to public charities last.
  • Carryovers and the floor. Gifts cut by the floor can be carried forward only from a year in which gifts of the same kind are also over their AGI limit, and then only as an addition to that kind's carryover (new section 170(d)(1)(C)). Otherwise, the amount cut by the floor isn't carried forward.
  • The cash limit stays. Section 70425 also rewrites section 170(b)(1)(G)(i), so cash gifts to public charities stay limited to six-tenths of the contribution base, now without an end date.
  • A limit for the top bracket (section 70111). Section 68 now reduces an individual's itemized deductions by two thirty-sevenths of the smaller of (1) those itemized deductions or (2) taxable income, figured before this rule and with those deductions added back, above the point where the top rate bracket begins. The statute says this applies "after the application of any other limitation," so it comes after the charitable floor and the AGI limits.
  • Non-itemizers (section 70424). Section 170(p) again allows a deduction for some cash gifts by people who don't itemize, now with no end year.

What to check: whether a 2026 return applied the floor to the right total of gifts, and whether any amount cut by the floor was carried forward only with a carryover of the same kind of gift.

2. The deduction for people who don't itemize

The IRS provisions page for the new law says: "Beginning with tax year 2026, individuals who do not itemize may deduct" a limited amount "of cash contributions made to eligible charitable organizations," and "Certain contributions - including donations to donor-advised funds and supporting organizations - do not qualify." It adds that noncash gifts such as "clothing, stock, or other property, do not qualify," and that "Prior-year carryovers do not qualify." The statute is the source: section 170(p) excludes gifts to supporting organizations under section 509(a)(3) and gifts "for the establishment of a new, or maintenance of an existing, donor advised fund." IRS Publication 6196 also reminds taxpayers to check that the charity is eligible and to keep receipts or bank records.

The statute also sets this deduction apart from the new floor: section 70425 amends section 170(p) so it's figured without regard to the floor.

What to check: on a 2026 return that takes the standard deduction, whether qualifying cash gifts were claimed, and that gifts to a donor-advised fund, stock gifts and carryovers weren't counted.

3. Bunching: what to check

"Bunching" means giving more in some years and less in others, so that itemized deductions clear the standard deduction in the years with larger gifts. It isn't an IRS term; the rules behind it are. A gift counts in the year it's actually made (Publication 526; see our page on year-end planning for high earners for timing and records). The 2025 Schedule A instructions say that in most cases your federal income tax will be less if you take the larger of your itemized deductions or your standard deduction. Since 2026, the floor applies each year a gift is itemized.

What to check: for each of the last two years, total gifts, whether the return itemized or took the standard deduction, and whether a year with larger gifts had any carryover that was tracked into the next year.

4. Donor-advised funds

  • What they are. Section 4966(d)(2) defines a donor advised fund as a fund or account "which is separately identified by reference to contributions of a donor or donors," "which is owned and controlled by a sponsoring organization," and over which a donor "has, or reasonably expects to have, advisory privileges with respect to the distribution or investment" of the amounts in it. The IRS donor-advised funds page adds that "Once the donor makes the contribution, the organization has legal control over it."
  • When the gift counts. Publication 526 says you can't deduct a gift to a donor-advised fund if you "don't have a contemporaneous written acknowledgment from that sponsoring organization that it has exclusive legal control over the assets contributed," or if the sponsor is a war veterans' organization, a fraternal society or a nonprofit cemetery company. It notes other circumstances can also bar the deduction.
  • What they don't qualify for. Gifts to a donor-advised fund don't count toward the non-itemizer deduction (section 2 above), and a distribution from an IRA to a donor-advised fund isn't a qualified charitable distribution (section 6 below).

What to check: the sponsor's written acknowledgment for each gift to the fund, including the exclusive legal control language, and that the deduction was taken in the year the fund received the gift.

5. Gifts of stock held more than one year

  • The value. Publication 526 says property is capital gain property "if you would have recognized long-term capital gain had you sold it at FMV on the date of the contribution," which includes "capital assets held more than 1 year," and that for capital gain property "you can generally use the FMV of the property."
  • The AGI limits, in words. Gifts of capital gain property to an organization in Publication 526's first category of qualified organizations (which includes churches, schools, hospitals and publicly supported charities) are generally limited to three-tenths of AGI, after other gifts to those organizations. Gifts of capital gain property to other qualified organizations are generally limited to one-fifth of AGI. Cash gifts to first-category organizations have a higher limit, six-tenths of AGI.
  • Carryovers. Publication 526 says gifts over the AGI limits can generally be deducted "in each of the next 5 years until it is used up, but not beyond that time."
  • Stock held one year or less. It's ordinary income property under Publication 526, and Publication 526 says the deduction rule "generally" limits it to your basis in the property.
  • Form 8283. The Form 8283 instructions (12/2025) say publicly traded securities are reported in Section A even if the claimed value is over the Section B threshold, so they don't need a qualified appraisal.

What to check: for each stock gift, the holding period, the date the shares were actually transferred to the charity, the value used on that date, whether the right AGI limit was applied, and any carryover to later years.

6. IRA distributions to charity (qualified charitable distributions)

Section 408(d)(8) lets an IRA owner have a distribution made directly by the trustee to a charity and exclude it from income, up to an annual limit. Publication 590-B (2025) says: "You must be at least age 70½ when the distribution is made," and you need the same acknowledgment you would need for a charitable deduction. The statute excludes supporting organizations and donor-advised funds as recipients. Publication 590-B also cautions: "You can't claim a charitable contribution deduction for any QCD not included in your income."

What to check: for an IRA owner who is at least seventy and a half, whether any distribution paid straight to a charity was reported as a qualified charitable distribution on Form 1040, with the charity's acknowledgment on file, and that it wasn't also deducted on Schedule A.

7. Records and Form 8283

  • Gifts of two hundred fifty dollars or more. Under Regulations section 1.170A-13(f), no deduction is allowed for a gift of that size "unless the taxpayer substantiates the contribution with a contemporaneous written acknowledgment from the donee organization." Publication 526 says the acknowledgment must be written. For cash, it states the amount; for property such as stock, it includes a description (but not necessarily the value) of the property. Either way, it says whether you got any goods or services in return, with a description and good faith estimate of their value. To be contemporaneous, you must get it by the earlier of the date you file or the due date, including extensions.
  • Noncash gifts. The Schedule A instructions say that if your deduction for a noncash gift is over the IRS threshold, "you must complete and attach Form 8283." The Form 8283 instructions say Section B items "require a written qualified appraisal by a qualified appraiser," with the publicly traded securities exception above.
  • One caution if a partnership or S corporation passed a conservation easement deduction through to you: Regulations section 1.6011-9 identifies syndicated conservation easement transactions, and substantially similar transactions, as listed transactions, which have their own disclosure rules. It replaced Notice 2017-10 for transactions after October 8, 2024. That's a question for your CPA.

What to check: an acknowledgment for every gift at or above the threshold, dated before the return was filed, and a Form 8283 (with an appraisal where Section B applies) for each noncash gift over the threshold.

8. What to check on your last two returns

  • Schedule A, lines 11 through 14 (gifts by cash or check, other than by cash or check, and carryovers), or the decision to take the standard deduction instead.
  • For 2026 returns: the charitable floor, the top-bracket reduction under section 68, and, for non-itemizers, the cash-gift deduction.
  • Written acknowledgments for every gift at or above the threshold, including from any donor-advised fund sponsor.
  • Form 8283 for noncash gifts, with the right section, and appraisals where required.
  • Gifts of stock: holding period, the value used and the AGI limit applied.
  • Carryovers from earlier years, and whether they were used within the five-year window.
  • IRA distributions to charity: reported as qualified charitable distributions and not deducted a second time.
  • Schedule K-1s that pass through charitable contributions from a partnership or S corporation.

Where DeepYield fits

DeepYield is a second set of eyes, not a replacement for your CPA. A free two-year look-back is a review of your last two years of tax returns, done for you, then a 30-minute call to walk through what we found. For charitable giving, that means checking the itemizing decision each year, the records behind each gift, Form 8283, gifts of stock and carryovers. We go looking for what's missing, and we share what we see with you and your CPA, who can review it line by line. Sometimes the review ends with nothing to change.

Related: Tax Planning for High-Income Earners · Can a Ranch Loss Offset Your W-2 Income? · RSUs, Stock Options and ESPP Shares: How They're Taxed and What to Check on Your Return · The SALT Cap After the 2025 Tax Law: What Changed for High Earners and Landowners · Year-End Tax Planning for Farmers and Ranchers · Can You Get a Second Opinion on Your Tax Return?

Request your free two-year look-back →

Frequently asked questions

What is the new floor on charitable deductions?

Starting with tax years beginning after December 31, 2025, section 170(b)(1)(I), added by section 70425 of Public Law 119-21, allows itemized charitable gifts only to the extent the year's total exceeds one two-hundredth of your contribution base, which is adjusted gross income figured without any net operating loss carryback.

How does the 2026 limit for the top tax bracket affect charitable gifts?

Section 68, as rewritten by section 70111 of Public Law 119-21, reduces itemized deductions by two thirty-sevenths of the smaller of those deductions or the amount by which taxable income, figured with those deductions added back, is above where the top rate bracket begins. So it can apply even if taxable income after deductions is below that bracket. Charitable gifts are itemized deductions, so they're part of that reduction. The rule is applied after the other limits.

Can I deduct charitable gifts if I don't itemize?

Starting with tax year 2026, yes, for some cash gifts. The IRS says individuals who do not itemize may deduct a limited amount of cash contributions to eligible charities. Noncash gifts, prior-year carryovers, and donations to donor-advised funds and supporting organizations don't qualify.

Do gifts to a donor-advised fund count for the non-itemizer deduction?

No. Section 170(p) excludes gifts for the establishment or maintenance of a donor advised fund, and the IRS provisions page says donations to donor-advised funds do not qualify. Gifts to a donor-advised fund can still be itemized deductions if the other rules are met.

What is bunching charitable gifts?

It means concentrating gifts in some years so that itemized deductions exceed the standard deduction in those years. It isn't an IRS term. The rules behind it are that a gift counts in the year it's made, and that in most cases you take the larger of your itemized deductions or your standard deduction.

How is a gift of appreciated stock valued?

Publication 526 says stock held more than one year is capital gain property, and you can generally use its fair market value. Those gifts are generally limited to three-tenths of AGI when given to first-category organizations such as public charities, and the excess can generally be carried over for the next five years.

Who can make a qualified charitable distribution from an IRA?

Publication 590-B says you must be at least age seventy and a half when the distribution is made, and it must be made directly by the trustee to an eligible charity. Section 408(d)(8) excludes donor-advised funds and supporting organizations, and you can't also deduct the amount.

What records do I need for a charitable deduction?

For a gift at or above the IRS threshold, a contemporaneous written acknowledgment from the charity stating the amount of cash (or describing the property, for a gift such as stock), whether you received goods or services, and a good faith estimate of their value. Noncash gifts over the threshold need Form 8283, and larger ones a qualified appraisal unless they're publicly traded securities.

Sources

Results depend on your specific facts. No outcome is guaranteed. This is general information, not tax advice; advice is provided only under a signed engagement.

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