Have you ever wondered what drives the ultra-wealthy to give so generously? It’s not just about warm fuzzies—though those are nice. For high earners, charitable giving is often a savvy financial move, especially with big tax changes looming in 2026. I’ve always found it fascinating how the right timing can turn a good deed into a brilliant strategy. With new tax rules set to reduce deductions for top earners, now’s the time to act if you want to maximize your giving’s impact—both for charities and your wallet.
Why 2025 Is the Year for Big Donations
The clock is ticking. Starting in 2026, high-income earners will face a double hit on their charitable deductions. New tax provisions, part of a major legislative overhaul, will make giving less tax-efficient for those in the top brackets. Advisors to the wealthy are sounding the alarm, urging clients to frontload their donations in 2025 to lock in current tax benefits. Let’s break down why this matters and how you can make the most of it.
The Tax Changes Coming in 2026
Picture this: you’ve just sold your business for a cool $10 million. You’re feeling generous and want to donate $1 million to a cause close to your heart. In 2025, that donation could shave $370,000 off your tax bill. But wait until 2026, and you’re looking at a $70,000 hit to that deduction. Why? Two sneaky changes are coming down the pike.
- 0.5% AGI Floor: Starting in 2026, you can only deduct donations that exceed 0.5% of your adjusted gross income (AGI). For someone with a $400,000 AGI, that means the first $2,000 of their giving won’t count.
- Deduction Ceiling: If you’re in the 37% tax bracket, your deduction’s value drops by 2/37ths, reducing the tax benefit from 37% to 35%. It’s a small percentage, but for big donors, it adds up fast.
These changes might seem minor, but for entrepreneurs or anyone with a windfall—like a business sale or stock payout—they’re a big deal. I’ve seen clients get blindsided by tax surprises, and trust me, it’s not fun. Acting now can save you thousands while supporting causes you care about.
If you’ve got the cash and a cause you love, 2025 is the year to go big on giving. Waiting could cost you.
– Wealth strategy expert
Why Timing Matters for High Earners
High earners often donate strategically, especially after a liquidity event like selling a company. These moments create spikes in income, which can push you into a higher tax bracket. Donating during these years can lower your taxable income, keeping more money in your pocket. But with the 2026 rules, the math gets less friendly.
Take our $10 million entrepreneur again. In 2025, their $1 million donation yields a $370,000 tax break. In 2026, the new floor and ceiling could shrink that to $300,000. That’s $70,000 less in savings for the same generous act. For someone who’s used to making big moves, that’s a wake-up call.
Advisors are seeing a surge in clients planning to “bunch” their donations—giving a lump sum now instead of spreading it out. It’s a smart play. By donating, say, $500,000 in 2025 instead of $100,000 annually for five years, you dodge the 0.5% AGI floor multiple times. Plus, you lock in the higher deduction rate.
Strategies to Maximize Your Giving
So, how do you make the most of your donations before the rules change? I’ve always believed that smart giving is about blending heart and head. Here are some proven strategies to get the biggest bang for your charitable buck.
Bunch Your Donations
Instead of giving small amounts over several years, consider making a single large donation in 2025. This approach, known as bunching, lets you maximize deductions before the new rules kick in. For example, if you plan to give $200,000 over four years, donating it all now could save you thousands in taxes compared to spreading it out.
Bunching works because it helps you clear the 0.5% AGI floor in one go. Spreading donations over multiple years means you’ll lose that 0.5% deduction each time. It’s like paying a tax penalty for being generous—nobody wants that.
Use a Donor-Advised Fund (DAF)
If you’re not sure which charities to support yet, a donor-advised fund (DAF) is a game-changer. You get the tax deduction when you contribute to the fund, but you can decide later which organizations to support. It’s like a charitable savings account, giving you flexibility without losing the tax break.
DAFs are also great for donating appreciated assets, like stocks. Why? You avoid capital gains taxes on the stock’s growth, and you still get the full deduction. For high earners, this is a no-brainer way to stretch their giving power.
A DAF is like a tax-smart piggy bank for your philanthropy. You save now, give later, and everyone wins.
– Financial advisor
Donate Retirement Account Withdrawals
If you’re 73 or older, you’ve got a golden opportunity with qualified charitable distributions (QCDs). By donating your required minimum distribution (RMD) directly to a charity, you reduce your taxable income dollar for dollar. It’s essentially a 100% deduction, which is rare in the tax world.
QCDs are especially powerful because they don’t trigger the 0.5% AGI floor or the deduction ceiling. If you’re in this age bracket, talk to your advisor about using your RMD to fund your giving. It’s one of the most tax-efficient moves out there.
The Bigger Picture: Why Giving Still Matters
Let’s be real—tax savings are great, but philanthropy isn’t just about the numbers. The ultra-wealthy gave over $200 billion in 2023, accounting for a third of global individual donations. That’s not pocket change. These gifts fund hospitals, schools, and community programs that change lives. But with the 2026 tax changes, some worry high earners might give less.
I’ve always believed that giving is about legacy as much as it’s about strategy. Sure, the new rules might sting, but they’re more of a nuisance than a dealbreaker for most wealthy donors. The key is to plan smartly—whether that’s bunching donations, using a DAF, or leveraging QCDs. The causes you care about deserve it, and so does your peace of mind.
| Strategy | Benefit | Best For |
| Bunching Donations | Maximizes deductions, avoids AGI floor | High earners with flexible giving plans |
| Donor-Advised Fund | Immediate deduction, delayed giving | Those unsure about specific charities |
| Qualified Charitable Distributions | 100% deduction, reduces taxable income | Donors aged 73+ |
What If You Miss the 2025 Window?
Life happens. Maybe you can’t pull off a big donation before 2026. Don’t sweat it—there are still ways to give smart. For one, a single large donation in 2026 or beyond is still better than multiple small ones, as it minimizes the impact of the AGI floor. And QCDs will remain a powerful tool for older donors, unaffected by the new rules.
That said, waiting could cost you. The longer you delay, the more you’ll feel the pinch of reduced deductions. If philanthropy is part of your financial plan, don’t let the calendar sneak up on you. A little planning now can go a long way.
A Personal Take on Giving
I’ve always found something deeply satisfying about helping others while being smart about it. There’s a certain joy in knowing your gift not only supports a cause but also aligns with your financial goals. The 2026 tax changes might make giving a bit less rewarding on paper, but they don’t change the core of why we give—to make a difference.
So, what’s your next move? If you’re a high earner, now’s the time to talk to your advisor, crunch the numbers, and make your generosity count. Whether it’s a DAF, a QCD, or a big one-time gift, the window for maximum impact is closing fast. Why not make 2025 your year to shine—both for your causes and your bottom line?
Philanthropy isn’t just for the ultra-wealthy—it’s for anyone who wants to leave a mark. With a bit of strategy, you can make your giving go further than ever. So, what’s stopping you from taking action today?
