What Tax Reform Means for Charitable Giving in 2026

A Year Later: What Have We Learned?

When tax reform legislation was signed into law in 2025, much of the immediate discussion focused on deduction limits, thresholds, and how donors might respond to the new rules.

Those questions remain relevant. But one year later, a broader picture is emerging.

While some charitable deduction rules have changed, many of the forces driving philanthropy remain firmly in place. Donors continue to seek tax-efficient ways to support the causes they care about. Advisors continue helping clients align charitable intent with broader financial goals. And donor-advised funds (DAFs) continue to play an increasingly prominent role in charitable planning conversations.

The result is a more nuanced reality than many initially anticipated. In short: the rules have changed but the need for thoughtful charitable planning has not.

What Changed Under the New Rules?

Several charitable giving provisions took effect beginning in 2026. Among the most notable:

• A new charitable deduction for certain cash donations is available to taxpayers who do not itemize.
• Itemizing taxpayers are generally subject to a 0.5% adjusted gross income (AGI) floor on charitable deductions.
• The cap for itemized deductions is reduced for taxpayers in the highest marginal tax bracket.
• Existing AGI limitations on charitable contributions remain in place.
• The state and local tax (SALT) deduction cap is temporarily increased, with annual adjustments and an income phase-out.

As a result of these changes, many high-income taxpayers will experience reduced tax benefits in connection with their charitable giving. At minimum, these changes increase the importance of thoughtful gift structuring. For some donors, the introduction of an AGI-based floor or limitations on itemized deductions may reduce the immediate tax benefit of charitable giving. In response, many advisors are revisiting strategies that allow donors to time deductions more deliberately and maximize tax efficiency across multiple years — an area where DAFs can play a central role.

However, tax policy is only one factor shaping charitable behavior.

New for 2026: The Momentum Behind Philanthropy Remains Strong

One of the more interesting developments over the past year is what has not changed. Despite concerns that reduced tax incentives might dampen giving, philanthropy continues to demonstrate resilience. Donors continue supporting nonprofits they care about. Mission-driven organizations continue addressing critical community needs. Advisors continue incorporating charitable conversations into broader planning discussions. At the same time, charitable giving continues to grow, with a new record high of $617 billion in total giving in 2025 according to Giving USA’s recently released annual report.

Tax Efficiency Still Matters

While the rules have changed, tax considerations remain an important part of effective philanthropic planning. Thoughtful charitable giving can help donors pursue both their financial and philanthropic goals, but the strategies may need to evolve. In an environment with deduction thresholds and potential limitations on itemized benefits, timing, asset selection, and appropriate giving vehicles are becoming more important than ever.

DAFs continue to provide flexibility for donors. DAF donors can “bundle” or concentrate charitable contributions into a single tax year to exceed AGI thresholds, while preserving the ability to distribute grants to charities over time. This flexibility allows donors to optimize deductions when they are most valuable without changing their long-term philanthropic intent.

For many donors, the most tax-efficient charitable gift may not be cash. Appreciated securities, privately held business interests, and other complex assets continue to play an increasingly important role in charitable planning conversations.

New for 2026: Business Transitions and Liquidity Events

Another trend shaping charitable planning conversations is the continued increase in business transition activity.

Business sales, succession planning efforts, and renewed IPO momentum are creating opportunities for founders, executives, and business owners to evaluate charitable strategies before significant wealth events occur.

Historically, charitable planning often happens after a liquidity event. Now, advisors are helping clients explore charitable opportunities earlier in the process. This shift allows donors to evaluate a wider range of options, including gifts of appreciated assets and charitable structures that may provide both philanthropic and tax benefits. In these situations, DAFs are often used as a planning tool to accept contributions of appreciated assets prior to a transaction, potentially reducing taxable income while creating a dedicated pool of charitable capital for future giving. For advisors working with entrepreneurs and business owners, these conversations are becoming an increasingly important component of holistic planning.

What Advisors Should Be Watching

Several trends are likely to shape charitable planning in the years ahead:

• Continued Growth of DAFs: Donors continue seeking flexibility, simplicity, and the ability to support charitable organizations over time.
• Increased Use of Appreciated Assets: More donors are discovering that the most tax-efficient charitable gift is often not cash.
• Family Philanthropy and Legacy Planning: More families are using philanthropy to engage future generations and create a framework for shared decision-making.
• The Great Wealth Transfer: The ongoing transfer of wealth between generations continues to create new opportunities for charitable planning.
• Integration Across Planning Disciplines: Increasingly, charitable planning is becoming connected to tax strategy, estate planning, business succession, and wealth management conversations rather than existing as a standalone activity.

Looking Ahead

The first full year under the new rules has demonstrated that charitable planning remains both relevant and resilient. While tax incentives continue to influence donor behavior, philanthropy increasingly serves a broader role: helping families connect wealth with purpose, engage future generations, navigate business transitions, and support the causes that matter most to them.

As the charitable landscape evolves, tools like DAFs are helping bridge the gap between changing tax rules and enduring philanthropic intent — allowing donors to give thoughtfully, strategically, and with long-term impact in mind. For advisors, this underscores the importance of helping clients navigate an increasingly interconnected landscape where tax strategy, charitable intent, family governance, and long-term impact come together.