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A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
Lawyers to the wealthy are advising clients to ramp up their charitable giving this year to take advantage of tax advantages that will decline in 2026.
President Donald Trump’s sweeping tax-and-spending bill included provisions that reduce the tax benefits of charitable giving for high earners. Since the provisions don’t take effect until next year, advisors to wealthy donors are recommending they frontload or “bunch” their giving this year to take advantage of tax benefits.
“If you’re thinking about making a big gift, or you know you have a charity that you want to be supportive of over the next couple years, and you got the cash right now, this is the time make a big gift,” said Dan Griffith, director of wealth strategy at Huntington Private Bank.
The bill handicaps top-earning donors in two ways. First, starting in 2026, donors who itemize will only be able to deduct charitable contributions in excess of 0.5% of their adjusted gross income (AGI). With this floor, a household with an AGI of $400,000 that makes $10,000 of charitable donations in 2026 will not be able to deduct the first $2,000 in giving, according to Griffith.
Second, taxpayers in the 37% tax bracket will have their deduction reduced by 2/37th of the value. This ceiling reduces the effective tax benefit from 37% to 35%.
While the floor and ceiling changes may seem small, they have notable ramifications for top earners. For instance, consider an entrepreneur who has $10 million in AGI after selling a business and donates $1 million to lower his tax liability. If done in 2025, the entrepreneur would get a tax reduction of $370,000, according to Griffith. Starting in 2026, the deduction would be reduced by $20,000 thanks to the ceiling and another $50,000 due to the floor, he said.
These caps are especially significant to entrepreneurs, who often make large donations when their AGI peaks in order to lower their tax burden, according to Kaufman Rossin’s Todd Kesterson, who leads the accounting firm’s private client business.
“We have a lot of our clients because they had liquidity events. I think in every case, the year they had the liquidity event, they made charitable contributions,” he said. “But now it’s kind of the worst year to make them because of the first half percent is not deductible.”
Kesterson anticipates a flurry of donations before the year-end in order to avoid the double whammy.
Top earners who are philanthropically minded should consider bunching their donations, such as giving $500,000 now rather than contributing $100,000 annually over five years, he said.
If they cannot make the donation before the end of the year, they are still better off making one large donation than spreading it out over several years and triggering the 0.5% floor multiple times, according to Griffith.
Despite the tax changes, top earners who are 73 and older can still get major tax savings by donating their required minimum withdrawal from a retirement account.
“It’s in effect, a 100% deduction, because it’s reducing their income, dollar for dollar,” Kesterson said of qualified charitable distributions.
For donors pressed for time with 2026 quickly approaching, Justyn Volesko of Cerity Partners Family Office recommends contributing to a donor-advised fund. With a DAF, donors get the upfront deduction and can wait to decide which charities to fund. It’s also simpler and faster to donate appreciated stock — which Volesko favors for capital-gains tax savings — to a DAF than a charity, he said.
While the GOP bill encourages giving by lower- and middle-income donors, the wealthy account for the majority of charitable giving. Research firm Altrata estimates that some 500,000 ultra-wealthy individuals worth at least $30 million accounted for $207 billion in donations in 2023, more than a third of the world’s total giving by individuals.
Kesterson said the new tax regime is more likely to be a nuisance for wealthy clients than a true obstacle to charitable giving. Griffith anticipates some will wonder if donating is worth it.
“It’s certainly not going to incentivize it,” he said.
