2026 Tax Changes
As a result of the One Big Beautiful Bill Act (OBBBA) signed into law on the 4th of July, 2025, many of the provisions of the TCJA like the expanded standard deduction amounts and individual tax rate reductions that were scheduled to sunset at the end of 2025 were extended temporarily or made permanent in future tax years.
The OBBBA also increased the estate and gift tax exemption to $15 million per person ($30 million for married couples) beginning in 2026. In future years, the exemption will be indexed for inflation annually, like individual income tax rates.
The new provision included targeted relief for business and many individuals. For 2025 and through the 2028 tax year, seniors 65 and older with incomes up to $75,000 ($150,000 for couples) will also receive a “bonus” deduction of $6,000. Limitations apply for those with higher incomes. Taxes on tips, overtime and other provisions will benefit millions of taxpayers with moderate incomes, while some with higher incomes will be subject to phaseouts based on their income levels.
New Gift Opportunities
Cash gifts remain deductible up to 60% of AGI for 2025 for those who itemize. Taxpayers with higher incomes may be affected by slight adjustments. For 2026, there is a new universal deduction available for those who take the standard deduction. Nonitemizer taxpayers will be able to deduct cash gifts to charity of up to $1,000 or $2,000, depending upon whether they file taxes singly or jointly. (Gifts to donor advised funds are not included in the nonitemizer deduction.)
More on Gift Opportunities
In late December 2022, Congress passed the Consolidated Appropriations Act, 2023, which was signed into law in the closing days of the year. The massive legislation included the SECURE 2.0 Act of 2022, which was primarily designed to encourage retirement savings for future generations of Americans. This portion of the legislation also included a provision to expand qualified charitable distributions (QCDs) from individual retirement accounts. IRA QCDs allow tax-free gifts to charities of up to $100,000 per year. The law allows a special one-time election to make QCDs through charitable remainder trusts and gift annuities for up to $50,000. These amounts are indexed for inflation annually. For 2026, the maximum QCD amount is $111,000, and the one-time election for qualified distributions to charitable gift annuities and charitable remainder trusts is increased to $55,000.
For more information, please contact us or your tax advisors about this new way to enjoy tax-free charitable giving.
Good News for Gift Annuities!
Charitable gift annuity rates have increased to levels not seen in years. Gift annuity rates are based on age. Your gift annuity rate will be determined by the rate that is within six months of your nearest birthday. The rates are illustrated below.
| One Life | Rate |
|---|---|
| 60 | 5.2% |
| 65 | 5.7% |
| 70 | 6.3% |
| 75 | 7.0% |
| 80 | 8.1% |
| 85 | 9.1% |
| 90+ | 10.1% |
| Two Life | Rate |
| 60 & 64 | 4.8% |
| 65 & 67 | 5.1% |
| 70 & 72 | 5.6% |
| 75 & 78 | 6.4% |
| 75 & 85 | 6.7% |
| 78 & 82 | 6.9% |
| 85 & 90 | 8.7% |
The above gift annuity rates are based on the American Council On Gift Annuities suggested maximum rates and were confirmed in December 2025. Check with us for more information.
Charitable Giving Strategies to Consider
- Qualified charitable distributions (QCDs) from IRAs are advantageous for eligible individuals. Although no charitable deduction is available, the income tax that is normally owed on withdrawals is avoided. QCD rules:
- Individuals must be at least age 70½ on the date of the gift.
- QCDs can come only from IRAs, not 401(k)s or other retirement accounts.
- A maximum of $111,000 may be given annually in 2026.
- The transfer must come directly from the IRA custodian.
- QCDs can be made only to public charities, not to private foundations or donor advised funds.
- Distributions can be used to satisfy a person’s pledge.
- Life-income gifts such as charitable remainder trusts and charitable gift annuities offer several advantages to satisfy philanthropic goals. Because deductions for remainder trusts and gift annuities tend to be larger, you may be able to itemize in the year a gift is arranged. Payments from life-income gifts may be attractive to those who would normally make bequests to charity through a will or living trust—providing income tax and possibly capital gains tax savings. Remember, the new SECURE 2.0 law allows for a special election to use IRA QCDs to fund split-interest gifts. The maximum allowable amount for 2026 is $55,000.
- Making gifts of appreciated assets, such as stock or mutual funds, allows you to avoid the capital gains tax that would be due if the assets were sold, offering tax savings even if you use the standard deduction.
- Those with donor advised funds can direct gifts to public charities. You may be able to itemize by making a larger gift to a donor advised fund, from which annual gifts can be made over several years. Contributing appreciated securities to a donor advised fund provides added tax savings.
- “Bunching deductions” in order to itemize charitable gifts, the increased $40,000 state and local taxes in alternate years will benefit millions of taxpayers in 2026. Check with us or your advisors.
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