Golden Years Stories

As we approach the end of 2026, there are many things to look forward to – family get-togethers, holiday traditions, and Christmas celebrations. But it’s also a good time to schedule in tax and charitable reviews, ensuring you’re prepared to file for 2026.

Several new federal rules go into effect for the 2026 tax year, and these changes can impact how your charitable gifts will be deducted on your tax bill. Though the year is winding down, there’s still time to maximize your tax benefits – while making an impact on the causes close to your heart.  

Here’s an overview of the changes introduced for 2026, how they could impact you, and how you can make the most of them: 

1. Above-the-line deduction for non-itemizers 

Non-itemizers can deduct up to $1,000 (individual) or $2,000 (married, filing jointly) in cash donations to a charity. If you don’t itemize, this new tax provision introduces an exciting way to receive a tax benefit while also supporting your favorite nonprofit organization.  

It’s important to note – donations made through a charitable vehicle such as a donor advised fund are not eligible for this deduction. In order to receive this tax benefit, donations must be made directly to a nonprofit organization. If you normally give charitable contributions through your DAF but want to take advantage of this tax deduction, you’ll need to make a cash donation in addition to a DAF distribution.  

2. New floor on deductions for itemizers 

For those who do itemize, charitable contributions must exceed 0.5% of your adjusted gross income to claim a tax deduction. The cap on deductions for itemizers has not changed – you can still deduct cash gifts up to 60% of your adjusted gross income.   
For instance, a married couple with an adjusted gross income of $500,000 could only deduct charitable donations that exceed $2,500.   

3. Cap on deductions for top tax bracket 

And for those in the 37% marginal tax bracket, there’s a new limit to deductions. The new legislation has capped the tax benefits of itemized charitable deductions at 35%, a slight decrease from the previous cap of 37%.  
What to consider as you prepare to file 

Plan ahead. If you don’t itemize, you’ll need to make cash donations to take advantage of the above-the-line deduction before the end of 2026. If you do itemize, make sure your contributions exceed 0.5% of your adjusted gross income to claim your tax deduction.  

Consider a mix of cash and non-cash gifts. Due to the new tax implications, a combination of cash and non-cash gifts – like securities, real estate, farm commodities and more – can stretch your ability to make a lasting impact.  

Consider how qualified charitable distributions (QCDs) can offer significant tax advantages. With the new floor in place, taking a tax-free QCD from an IRA may be more beneficial than itemizing deductions, since it allows you to support charities while reducing your taxable income. This strategy is particularly useful if you’re over age 73, because it can help you manage your required minimum distributions (RMDs).  

Connect with your financial team. Everence financial professionals can help you navigate these changes, all while ensuring your charitable giving plan aligns with your faith, values and goals. And in collaboration with your accountant, your financial advisor can ensure your strategy is tax efficient and making the most of these new tax provisions. 

How we can help 

These changes reshape many aspects of charitable giving – when you give, how much you give and how you choose to give. As a trusted guide in giving, Everence can help you grow your ability to make a world of difference with our charitable planning tools and strategies. We can help you select a well-structured giving approach that offers tax efficiencies that can reward you, your heirs, and the charitable organizations you choose.  

To learn more about how Everence can help you plan ahead, visit everence.com/michiana or call 800-348-7468.