People who give regularly often write a check at the end of the year and move on. That is a perfectly good way to give. But for a family with significant assets, it is rarely the most effective way, either for the charity or for the donor. How you give can matter as much as how much you give. Year-end is when most of these decisions get made, which makes it a useful time to compare your options.
How the charitable deduction rules work now
Two rules in place for 2026 affect how much of a gift you can deduct if you itemize.
A 0.5% floor. Only charitable gifts above 0.5% of your adjusted gross income count toward the deduction. On $1 million of income, the first $5,000 of giving gets no deduction.
A cap on the benefit for top earners. For taxpayers in the 37% bracket, the value of itemized deductions is limited, so the tax benefit of a charitable gift is capped at the 35% rate.
Separately, people who take the standard deduction can deduct up to $1,000 ($2,000 for a married couple filing jointly) in cash gifts to public charities. That will matter to many households but less so to those who already itemize. Gifts to donor-advised funds do not qualify for that deduction.
The effect is that timing and the type of asset you give matter more.
Give appreciated stock, not cash
If you hold stock that has gone up a lot, donating the shares directly to a charity or donor advised fund can be better than selling them and donating the proceeds. You generally avoid the capital gains tax on the appreciation, and you can still deduct the full fair market value if you itemize. The charity, which does not pay tax, receives the full amount.
For gifts of appreciated stock, the deduction is generally limited to 30% of adjusted gross income. For cash gifts to public charities, the limit is 60%. Amounts above the limit can usually be carried forward for up to five years.
With long-term capital gains taxed at up to 20% federally, plus the 3.8% net investment income tax for higher earners, the savings on a large position can be significant.
Donor-advised funds
A donor-advised fund, or DAF, is an account held by a public charity. You contribute cash or securities, receive the deduction in the year you contribute, and then recommend grants to charities over time. The money can be invested in the meantime.
A DAF is useful if:
You have a high-income year, such as a business sale or large stock sale, and want the deduction now but have not decided where to give.
You want to give appreciated stock without having to match each gift to a charity’s ability to accept it.
You want to involve children or grandchildren in deciding where the family gives.
One caution: once you contribute, the gift is irrevocable. The money belongs to the charity sponsoring the fund, and your role is advisory and determining when and where to distribute it.
Bunching
With the 0.5% floor, some households benefit from bunching, which means putting two or three years of giving into one year. You itemize in that year, take the standard deduction in the other years, and a DAF lets you still send grants to charities on your usual schedule.
Gifts that also provide income
Charitable remainder trust.
You transfer assets, often a highly appreciated one, into a trust. The trust pays you or another beneficiary an income for life or a set number of years, and what is left goes to charity. It can spread out a large capital gain and provide income, but it is irrevocable and has setup costs, so it tends to make sense for larger gifts.
Qualified charitable distributions.
If you are 70½ or older, you can send money directly from an IRA to a charity. The amount is not included in your taxable income, and it can count toward your required minimum distribution. It can also keep your income lower for other purposes. It is often one of the simplest strategies available.
Charitable lead trust.
The reverse of a remainder trust: the charity receives income for a period, then what is left goes to your family. It is sometimes used to transfer assets to heirs at a reduced gift tax cost.
If you plan to give before year end
Timing. Gifts generally need to be completed by December 31 to count for the 2026 tax year, and a gift to a donor-advised fund is generally counted when the fund receives it.
Stock transfers. Moving shares between brokerage accounts can take days or longer, so starting early leaves room for delays.
Qualified charitable distributions. If you are 70½ or older, the transfer generally needs to go directly from your IRA to the charity before year end.
Start with the goal
The tax rules are a reason to compare options, not a reason to give. Before choosing a vehicle, it helps to answer a few questions:
How much do I want to give this year, and over the next ten years?
Which assets would be best to give, and which should I keep?
Do I want a say in how the gift is used, or a family tradition of giving?
Do I need income from what I give, or is this purely a gift?
Let’s Talk
If you give regularly and have not looked at how, it may be worth a conversation. Meira Wealth can coordinate with your CPA and attorney to look at which assets to give and when. Contact us or call us at (305) 670-4440. ¿Prefiere hablar con nosotros en español? Contamos con miembros de nuestro equipo que hablan español.
Frequently Asked Questions
Is a donor-advised fund contribution tax deductible?
If you itemize, contributions to a donor-advised fund are generally deductible in the year you contribute, subject to AGI limits (generally 60% for cash and 30% for appreciated securities held more than a year). Check current IRS guidance and consult your tax professional.
Can I deduct the full value of donated stock?
Generally, if you itemize and have held the stock for more than a year, you may deduct its fair market value and avoid capital gains tax on the appreciation, subject to the 30% of AGI limit. Gifts of stock held a year or less are generally treated differently.
What is a qualified charitable distribution?
It is a transfer made directly from an IRA to a qualifying charity by someone who is 70½ or older. The amount is not included in taxable income and can count toward a required minimum distribution, up to an annual limit.
Do I need to itemize to get a charitable deduction in 2026?
For most strategies, yes. For 2026, people who take the standard deduction can deduct up to $1,000 ($2,000 for married couples filing jointly) in cash gifts to public charities. Gifts to donor-advised funds do not qualify.
This article is provided for informational and educational purposes only. It does not constitute personalized financial, investment, tax, or legal advice or a recommendation, and reading it does not establish an advisory relationship with Meira Wealth. Investing involves risk, including the possible loss of principal. There is no guarantee that any strategy or plan will achieve its objectives. Past performance is not indicative of future results. Please consult with a qualified professional regarding your specific situation. For more information about Meira Wealth, please review our Form ADV Part 2A and Form CRS, available on our website.
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