Understanding Tax Changes for 2026: What Donors Need to Know
This Holiday season, we are continually reminded here at Crisis Assistance Ministry of how supportive this community is every day for our neighbors. As we head into the new year, we are excited for another wonderful year of supporting our neighbors with you. Thank you for all the support you have provided this year – you make all the difference.
There are some new tax changes coming in 2026, and it is important for you to know about them as they might influence your end-of-year giving.
Why We’re Sharing This Now:
Under new tax laws signed in 2025, several tax laws have been changed going into 2026 that may affect the tax benefits of charitable giving. Understanding these changes can help you make informed decisions about your year-end giving.
Important Note: This information is provided for general educational purposes. We strongly recommend consulting with your financial advisor and tax professionals about your specific situation.
What’s Changing:
- Deduction Floor for Itemizers: If you itemize deductions, only the portion of your charitable gifts that exceed 0.5% of your adjusted gross income (AGI) will be deductible. For example, if your AGI is $200,000, the first $1,000 of your charitable gifts won’t be deductible, but everything above that will be.
- Top Bracket Deduction Cap: There’s a new cap that limits the value of itemized deductions from 37% to 35% for higher-income taxpayers. In practical terms, if you’re in the top tax bracket and donate $10,000, your tax savings will be approximately $200 less than under the previous law (the benefit is now 35 cents on the dollar instead of 37 cents).
- For Corporate Donors: Starting in 2026, corporations can only deduct charitable gifts that are above 1% of their taxable income. For example, if a corporation’s annual taxable income is $200,000, the first $2,000 of charitable gifts will not be deductible, but everything else will be.
- “Universal” Deductions for Non-Itemizers: If you do not itemize your tax deductions, you can now deduct up to $1,000 (single filers) or $2,000 (married filing jointly) for cash gifts to public charities.
Considerations As You Make Your 2026 Giving Plans:
- Consider Giving Before Dec. 31st, 2025
If you itemize your deductions and plan to make a transformational gift, now is the time to do it. Giving before the end of the year ensures you receive the full tax deduction. This helps you avoid the new 0.5% AGI floor and maximizes your tax benefits. - Maximize Your Benefit by Using the Bunching Strategy
Due to the permanent increase in the Standard Deduction and new tax provisions, combining two or more years’ worth of donations into a single tax year can provide more return than taking the standard deduction. By bunching donations and itemizing in alternating years, you can exceed the new deduction floor. - Utilize Donor Advised Funds (DAFs):
Combining the Bunching Strategy with Donor Advised Funds offers flexibility and tax efficiency. You can contribute a larger amount to your DAF in one year, and you will get the full deduction that year, then distribute the grants to Crisis Assistance Ministry over time. This allows you to maintain consistent support while maximizing tax benefits.
Bonus Tip: If you take the standard deduction rather than itemizing, take advantage of the new “universal deduction” in 2026. This is a valuable opportunity that has not been available in recent years to get deductions up to $1,000 (single filer) or $2,000 (married filers).
We Are Here to Help
We know that changing tax laws can be confusing, and we deeply appreciate that Crisis Assistance Ministry is an organization you support and trust to serve our community.
As you plan your giving for 2026, we highly recommend consulting your financial advisor and tax professionals for professional advice. If you have any questions on how you can support Crisis Assistance Ministry, please do not hesitate to reach out to Shelly Biby, Chief Advancement Officer, at [email protected].
Thank you for your ongoing support. You create hope and stability for Charlotte-Mecklenburg.