For a lot of the families our advisors work with, the generous thing and the smart thing used to be the same check. You wrote it, you mailed it, and you took the deduction in April. Starting this year, those can be two different things.
The new federal tax law changed how charitable gifts are deducted beginning with tax year 2026, and the year-end giving season is when it starts to matter.
What changed for charitable giving in 2026?
Three things. If you itemize, the first 0.5% of your adjusted gross income in charitable gifts is no longer deductible. If your taxable income is in the top bracket, your itemized deductions get trimmed. And if you do not itemize, you can now deduct up to $1,000 of cash gifts ($2,000 on a joint return). All three come straight from the IRS's own Publication 505 for 2026 and its summary of the new law.
The trim works like this. Above $768,700 of taxable income on a joint return ($640,600 single), the IRS reduces your itemized deductions by 5.4% of whichever is smaller: your total itemized deductions, or the amount your income is over that line. The non-itemizer deduction is cash only, and gifts to donor-advised funds do not count toward it.
What does the 0.5% floor look like in real numbers?
Take a married couple with $300,000 of adjusted gross income who itemize and give $10,000 to their church and a few local causes this year. Half a percent of $300,000 is $1,500. So the first $1,500 of their giving is not deductible, and they deduct $8,500 instead of $10,000.
That is not a disaster. Their generosity did not change, and neither did the good it does. But it is a toll on every year of giving from now on, and it grows with income: at $600,000 of AGI the nondeductible slice is $3,000. For families who give every year, there is a route that avoids the toll entirely.
What is a qualified charitable distribution?
It is a gift sent directly from your IRA to a charity, and you can make one once you are 70½. Under IRS Publication 590-B, the money goes straight from your IRA custodian to the charity, it never shows up in your income, and it counts toward your required minimum distribution for the year. For 2026, each person can give up to $111,000 this way, according to IRS Notice 2025-67. A married couple who each have an IRA each get their own limit.
Because the gift never enters your income, there is no deduction to claim. That sounds like a loss until you see what it skips.
Why is a QCD worth more this year?
Because neither of the new rules touches it. The 0.5% floor and the top-bracket trim both apply to deductions, and a qualified charitable distribution is not a deduction. It simply never counts as income in the first place.
Go back to the couple giving $10,000. If one of them is 70½ and sends that $10,000 from an IRA instead of writing a check, all $10,000 stays out of their income, instead of an $8,500 deduction. They also get it whether or not they itemize, which matters because many retirees take the standard deduction and get no tax benefit from their gifts at all.
There is a quieter benefit too. A lower income number can help with other things tied to your tax return, including how much of your Social Security is taxed and the income-based surcharges on Medicare premiums. Those Medicare surcharges look back at your return from two years earlier, so a choice you make in 2026 can show up in 2028. We wrote about that two-year memory before, and tomorrow we will look at how it follows you into your Medicare drug coverage.
What are the catches?
There are a handful, and each one is the kind of detail that is easy to miss in December.
- Age 70½ on the day of the gift. Not the year you turn 70½. The day the money leaves the IRA.
- Direct from the custodian. If the check is made out to you and you pass it along, it is a regular taxable distribution. The custodian sends it to the charity.
- Not every charity qualifies. The IRS says donor-advised funds and supporting organizations are not eligible to receive these gifts.
- Get the receipt. You need the same written acknowledgment from the charity that you would need for a deductible gift.
- IRAs only. The gift has to come from an IRA, and not from an ongoing SEP or SIMPLE IRA.
- December 31 is the deadline. To count for 2026, the money has to leave the IRA this year. Custodians need time to process the request, so the last week of December is not the week to start.
What if you are not 70½ yet?
Then the new non-itemizer deduction may help: up to $1,000 of cash gifts, or $2,000 on a joint return, even if you take the standard deduction. If you itemize, the 0.5% floor makes the timing of your gifts worth a conversation with your tax preparer, because a gift that lands in one year can be worth more or less than the same gift in another.
Why this matters to the families we work with
When our advisors talk with families about legacy, giving comes up more often than you might think. People rarely ask how to give less. They ask how to make what they give go further. This year, for anyone 70½ or older with an IRA, one of the best answers is also one of the simplest: let the gift go straight from the account to the cause.
If you give every year and you are 70½ or older, it is worth a call to your advisor and your CPA before December, while there is still time to set it up. American Retirement Advisors is at 602-281-3898.
Disclaimer: The information in this article is for educational purposes only and does not constitute tax, legal, or investment advice. Tax laws change frequently, and individual circumstances vary. American Retirement Advisors does not provide tax or legal services. Before making any tax-related decisions, consult a qualified CPA, tax attorney, or financial planner who can evaluate your specific situation.