4 Ways To Receive A Tax Deduction For Charitable Contributions in 2025 and 2026, #283

In the season of giving, we’re discussing making charitable contributions in 2025 and 2026. Americans are known for their generous donations to worthy causes, but understanding the best ways to give and maximize your tax benefits is key.

This episode covers four effective strategies for making charitable contributions, from utilizing Qualified Charitable Distributions (QCDs) from your retirement accounts to cash donations, gifting highly appreciated stock or real estate, and using donor-advised funds. I also break down recent and upcoming tax law changes that impact your ability to itemize and deduct charitable donations, ensuring you avoid common pitfalls and make the most of your generosity.

Whether you’re planning a gift this year or thinking ahead, this episode is packed with actionable tips to help you give back and plan for a successful retirement. 

You will want to hear this episode if you are interested in...

• [00:00] Charitable giving and tax benefits.
• [05:01] Managing qualified charitable distributions.
• [08:03] Charitable deductions and rules changing in 2026.
• [13:17] Benefits of donor-advised funds.
• [16:23] Charitable contributions for tax deductions.

Four Smart Strategies for Charitable Giving in 2026

Charitable giving is at the heart of American generosity, with billions donated annually to causes that matter. But did you know your generosity can also be a powerful tool in your tax strategy, especially as rules shift for 2026? 

1. Qualified Charitable Distributions (QCDs): Tax Breaks from Your Retirement Account

If you’re 73 or older and taking required minimum distributions (RMDs) from a traditional IRA, a Qualified Charitable Distribution (QCD) can be a game-changer. Instead of taking your full RMD as income (which is taxable), you can direct some, or all, of it straight to a qualified 501(c)(3) charity. This distributed amount is excluded from your taxable income, potentially lowering your tax bill and even your Medicare premiums.

But details matter:

• The money must transfer directly from your IRA to the charity. You can’t touch the funds yourself and then donate.
• The charity must be a registered 501(c)(3).
• When you receive your year-end 1099-R tax form, it won’t indicate how much was a QCD. You (or your accountant) must reduce your taxable income by the QCD amount and annotate “QCD” on your return. Forgetting to do so can result in unnecessary taxes.

By leveraging QCDs, retirees not only support their favorite causes but also make the most of their hard-earned savings.

2. Cash Donations: Navigating Itemizing and New Deduction Thresholds

Traditional cash donations are an easy way to support charities and reduce taxes, but the benefits depend on your ability to itemize deductions. Until recently, many households in high-tax states struggled to itemize due to the $10,000 state and local tax (SALT) deduction cap.

Big change for 2026 - 2029:

• The SALT cap jumps to $40,000, making itemizing possible for more people.
• If your itemized deductions, including mortgage interest, medical expenses, property taxes, and charitable gifts, exceed the standard deduction, your donations can reduce your taxable income.
• In 2026, a $1,000 per individual (or $2,000 per couple) charitable deduction will be available even if you don’t itemize. However, your charitable giving must exceed 1.5% of your adjusted gross income to become deductible, creating a new bar to qualify.

Careful timing and documentation of donations can help maximize these new opportunities.

3. Donating Appreciated Assets: Stocks and Real Estate

If you’re sitting on highly appreciated stocks or real estate, donating them directly to charity can deliver a double tax benefit:

You avoid paying capital gains tax on the asset’s increase in value, and you can also deduct the current market value of your donation (subject to certain AGI limits: 30% for appreciated assets).

To qualify:

• The asset must have been held for at least one year.
• For real estate valued above $5,000, an independent appraisal is required.
• Charities get the full value, and you skip the capital gains tax bill.

If your donation exceeds the allowed AGI percent, you can carry the excess deduction forward up to five years.

4. Donor Advised Funds: Flexible Giving, Immediate Deductions

A Donor Advised Fund (DAF) is a charitable investment account. You can donate cash, stocks, or other assets now and get an immediate tax deduction, but distribute the funds to your chosen charities later, at your own pace.

Why use a DAF?

• It allows for strategic, larger contributions (helpful in years with unusually high income).
• You enjoy flexibility in choosing and timing your ultimate beneficiaries.
• Major brokerages like Fidelity, Schwab, and Vanguard offer DAFs, with differing minimum contributions and low-cost investment options.

Keep in mind that there are administrative fees (roughly 0.60% on the first $500,000), but DAFs are simpler and less costly than setting up a private foundation.

Smart Giving Starts with Smart Planning

As 2026 approaches, take time to review your charitable and tax strategy. Whether using QCDs, cash gifts, appreciated assets, or a donor-advised fund, the tax code changes mean new opportunities, and some fresh requirements. Consult a financial advisor to fit these options to your personal circumstances and maximize the impact of your generosity for both your favorite causes and your family’s financial wellbeing.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE 
• Fidelity
• Schwab 
• Vanguard

Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

 

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