Starting in 2026, high-income earners will quietly lose two major tax benefits on charitable giving. These changes don’t sound dramatic at first glance but when you run the numbers, they add up to a real haircut on your generosity.
Let’s break it down below.
Two Hidden Hurdles Ahead
Here’s what’s coming for top earners (those above roughly $400k single / $450k married filing jointly):
1️⃣ The first 0.5% of AGI you give each year won’t be deductible.
Translation: if your AGI is $800,000, the first $4,000 of your giving each year gets zero tax benefit.
2️⃣ Your charitable deduction will be capped at the 35% rate — even if you’re in the 37% bracket.
Translation: even the portion that is deductible won’t offset your taxes as much as it used to.
Let’s See What That Looks Like
Below is a realistic example of how this could look:
- Income: $800,000 AGI
- Tax Bracket: 37%
- Annual Giving: $15,000
Under Today’s Rules (2025):
Full $15,000 deduction
Saves 37% in taxes = $5,550
Under 2026+ Rules:
First $4,000 doesn’t count
Remaining $11,000 saves only 35% = $3,850
Result:
👉 Annual tax savings drop by $1,700
👉 Over 10 years, that’s $17,000 lost, even though you gave the exact same amount.
The Fix: Frontload Your Giving Before the Haircut
There’s a simple, elegant way to sidestep this problem: frontload your giving into a Donor-Advised Fund (DAF) before these rules take effect.
Here’s how it works:
Contribute $150,000 in 2025 to a DAF
Deduct the full amount at today’s 37% rate
Continue giving $15,000 per year to charities from the DAF
You’ve just funded a decade of giving, and preserved your full deduction.
Same charities. Same generosity.
But an extra $17,000 stays in your pocket instead of the IRS’s.
Why This Matters Now
High earners already face the sunset of the 2017 Tax Cuts and Jobs Act, which means higher marginal rates and fewer deductions across the board in 2026. Layer in this charitable haircut, and the impact on after-tax giving grows even steeper.
If you’ve been thinking about funding a DAF or prepaying charitable commitments, 2025 is your window to act while the full deduction still applies.
Bottom Line
The new rules don’t make giving less noble, but they do make it less efficient.
Smart donors plan their giving just like their investments, strategically, not reactively.
By frontloading into a DAF now, you can:
- Lock in today’s higher deduction rates
- Maintain consistent annual support for your favorite causes
- Avoid the coming haircut on your generosity
2025 may be the last year to give at full strength.
For high earners, that’s not just a tax move, it’s a wealth move.