Charitable giving is one of the most direct ways individuals translate personal values into lasting impact. In 2026, donors have access to a broad range of strategies that can support legacy goals while also improving tax efficiency when thoughtfully integrated into a broader financial plan.
Too often, however, conversations around charitable giving begin after key opportunities have already been missed. This guide outlines several of the most effective strategies available today, including updated 2026 limits, and provides a practical framework for incorporating them into a broader tax, estate, and financial planning strategy.
One important note before we begin: the tax landscape changed meaningfully with the passage of the One Big Beautiful Bill Act (“OBBBA”) (P.L. 119-21), signed into law on July 4, 2025. The changes most relevant to charitable planning have been incorporated throughout this guide.
Section 1: The Annual Gift Tax Exclusion
One of the simplest, and most overlooked, planning opportunities is the annual gift tax exclusion. In 2026, you can give up to $19,000 per person each year without triggering gift tax, filing a gift tax return, or using any of your lifetime exemption.
For married couples, that opportunity doubles. By electing gift-splitting, a couple can give up to $38,000 per recipient in 2026. There is also no limit on the number of people you can give to. For example, a couple with three adult children and four grandchildren could transfer a total of $266,000 in a single year without reducing their lifetime exemption. To take advantage of gift-splitting, both spouses must consent on IRS Form 709.
There is a separate rule for gifts to a spouse who is not a U.S. citizen. In 2026, the annual exclusion for those gifts is $194,000, up from $190,000 in 2025 under IRS Revenue Procedure 2025-32.
| Annual Gift Tax Exclusion | 2026 Key Figures | Amount |
|---|---|
| Individual annual exclusion per recipient | $19,000 |
| Married couple (gift-splitting) per recipient | $38,000 |
| Annual exclusion for gifts to non-citizen spouse | $194,000 |
| Gift tax return required (Form 709)? | No, if gift stays at or below exclusion Yes, for electing gift-splitting (both spouses must file) |
| Impact on lifetime exemption? | None, if gift stays at or below exclusion |
Certain transfers fall completely outside both the annual exclusion and the lifetime exemption: direct payments of tuition to an educational institution, and direct payments of medical expenses to a medical provider. These are unlimited and must be made directly to the school or provider, not to the individual. This is an area where families often make avoidable mistakes. For example, writing a check to a child to cover tuition generally will not qualify for the exclusion, even if the money is ultimately used for school.
Section 2: The Lifetime Estate and Gift Tax Exemption
One of the most important planning numbers in 2026 is the federal estate and gift tax exemption: $15 million per person, or $30 million for a married couple. That is a meaningful increase from the $13.99 million exemption in 2025 and reflects changes made under the One Big Beautiful Bill Act.
In practical terms, this is the amount you can transfer during your lifetime or at death before federal estate or gift taxes apply. Amounts above the exemption can be taxed at rates up to 40%, and taxable lifetime gifts reduce the exemption available later through your estate.
Just as important, the uncertainty surrounding the scheduled reduction in the exemption after 2025 has been removed. Before the law changed, many families were rushing to use the higher exemption before it was expected to be cut roughly in half. The OBBBA preserved the larger exemption amount and indexes it annually for inflation going forward, giving families more flexibility to plan thoughtfully rather than around a legislative deadline.
2026 Planning Note: Portability
Surviving spouses can inherit any unused federal estate tax exemption from a deceased spouse through a provision known as portability. To preserve this benefit, the executor of the deceased spouse’s estate generally must file a federal estate tax return (Form 706) and affirmatively elect portability, even if no estate tax is due.
Failing to make the election on time can result in the unused exemption being lost, making this one of the most important and commonly overlooked steps in estate administration.
Section 3: Charitable Deduction Rules for 2026
If your goal is both generosity and tax efficiency, understanding how the charitable deduction works is essential. Several rules changed for 2026 under the OBBBA, and the rules that stayed the same are equally important to know.
The 60% / 30% / 20% AGI Limits (Unchanged)
The IRS limits charitable deductions as a percentage of your Adjusted Gross Income (AGI), and the applicable cap depends on who you are giving to and what you are giving:
- 60% of AGI – Cash donations to public charities (including donor-advised funds) and certain private foundations
- 30% of AGI
- Long-term appreciated capital gain property donated to public charities
- Cash contributions to private non-operating foundations
- 20% of AGI – Long-term appreciated capital gain property donated to non-operating foundations. This is the most restrictive tier.
If your contributions exceed these annual limits, the excess is not lost. Instead, it can typically be carried forward for up to five additional tax years, subject to the same percentage limitations in each year.
New for 2026: The 0.5% AGI Floor for Itemizers
Beginning in 2026, itemized charitable deductions are subject to a new 0.5% AGI floor. Under this rule, only charitable contributions exceeding 0.5% of adjusted gross income are deductible in the year made. The floor applies in addition to existing percentage limitations on charitable deductions under IRC §170(b). It applies to the total of all charitable gifts for the year, not on a gift-by-gift basis.
The key takeaway: every dollar given in 2026 has slightly less tax benefit than it would have in prior years for itemizers, which makes tax-efficient giving strategies that bypass this floor, like Qualified Charitable Distributions, even more valuable.
New for 2026: Above-the-Line Deduction for Non-Itemizers
For taxpayers who take the standard deduction ($16,100 for single filers and $32,200 for married couples filing jointly in 2026), the OBBBA created a limited deduction for charitable giving. Beginning in 2026, up to $1,000 per individual or $2,000 per married couple in cash donations to qualified public charities can be deducted without itemizing.
This deduction is available in addition to the standard deduction and is limited to cash gifts made directly to public operating charities. Contributions to donor-advised funds and private foundations do not qualify for this treatment.
Section 4: Qualified Charitable Distributions from IRAs
For clients age 70½ or older with a traditional IRA, the Qualified Charitable Distribution (QCD) remains one of the most tax-efficient strategies available in financial planning. The rules are relatively simple, the tax benefits are meaningful, and the contribution limits have increased for 2026.
| QCD Key Rules | 2026 Figures | Details |
|---|---|
| 2026 annual QCD limit per individual | $111,000 (up from $108,000 in 2025) |
| Married couple combined limit (each from own IRA) | $222,000 |
| One-time QCD to split-interest entity (CRT or CGA) | $55,000 (up from $54,000 in 2025) |
| Minimum age to make a QCD | 70½ years old |
| RMD age (when QCDs can satisfy RMDs) | Age 73 (or age 75 if born 1960+) |
| Eligible accounts | Traditional IRA, Inherited IRA, inactive SEP IRA, inactive SIMPLE IRA |
| Eligible recipients | Public 501(c)(3) charities only (not DAFs, not private foundations) |
The key advantage of a Qualified Charitable Distribution is simple: it never shows up in taxable income. A QCD is excluded from gross income entirely, meaning it does not increase AGI, does not affect tax brackets, and does not trigger Medicare IRMAA surcharges. It is also unaffected by itemized deduction rules, including the new 0.5% AGI floor. For many retirees who take the standard deduction, this often makes it a more tax-efficient way to give than writing a check.
In effect, a QCD allows you to give directly from pre-tax IRA dollars. For clients who do not need their full required minimum distribution (RMD) for living expenses and are charitably inclined, it is one of the cleanest planning opportunities available.
Important procedural note: the QCD must be paid directly from the IRA custodian to the qualifying charity. If the funds pass through your hands first, the distribution becomes ordinary taxable income and loses its QCD status. In addition, the IRS treats the first dollars distributed from an IRA each year as the required minimum distribution, so timing matters. To ensure a QCD satisfies the RMD, it should generally be completed before any other IRA withdrawals are taken that year.
Section 5: Donor-Advised Funds
A donor-advised fund (DAF) is a charitable giving account held at a public charity, such as a community foundation or a national sponsoring organization. You make an irrevocable contribution, receive an immediate charitable deduction, and then recommend grants to qualified charities over time.
DAFs are especially useful in years when income is elevated or uneven, or when a donor wants to make a large, tax-efficient contribution upfront while distributing gifts over several years. A common strategy is contributing appreciated securities directly to the DAF, which can avoid capital gains tax while allowing a deduction for the full fair market value, subject to applicable AGI limits.
2026 DAF Considerations
- Cash contributions to a DAF are generally deductible up to 60% of AGI.
- Contributions of long-term appreciated assets are generally deductible up to 30% of AGI at fair market value.
- DAF contributions do not qualify for the above-the-line charitable deduction available to non-itemizers.
- DAF grants must go to qualified public charities and cannot be made to other DAFs, private foundations, or individuals.
- There is no federal requirement for annual distributions, though many sponsoring organizations encourage ongoing grant activity.
- Qualified Charitable Distributions (QCDs) cannot be made to a DAF, as the two strategies serve different planning purposes.
Bunching Strategy with a DAF
With the standard deduction set at historically elevated levels, many donors find that their annual charitable gifts alone are not enough to make itemizing worthwhile. One commonly used strategy is “bunching” which is combining two or more years of planned giving into a single contribution to a donor-advised fund in a high-income year. This allows the donor to itemize in that year and capture the full tax benefit, while continuing to support charities over time through grants from the DAF in subsequent years. The result is a more flexible giving strategy that aligns charitable intent with optimal tax timing.
Section 6: Donating Appreciated Assets
One of the most effective charitable strategies is donating appreciated assets directly to charity. When long-term appreciated securities, real estate, or other capital gain property are given to a qualified public charity, the donor generally receives a charitable deduction equal to the asset’s fair market value and avoids paying capital gains tax on the appreciation.
This combination can make direct gifting significantly more tax-efficient than selling the asset and donating the after-tax proceeds. The charity receives the full value of the asset, while the donor eliminates the embedded gain.
Deductions for appreciated property are generally limited to 30% of AGI, with any excess carried forward for up to five additional tax years, allowing flexibility in planning larger gifts.
Section 7: Charitable Remainder Trusts and Charitable Lead Trusts
For donors who want to give to charity while retaining an income stream, or who want to benefit charity while passing remaining assets to family, split-interest trusts offer a sophisticated planning option.
Charitable Remainder Trust (CRT)
A Charitable Remainder Trust (CRT) provides income to the donor or another beneficiary for a set term or for life, with the remaining assets ultimately passing to charity. At funding, the donor receives a partial charitable income tax deduction based on the present value of the future charitable remainder.
- CRTs can be structured as either a fixed annuity (Charitable Remainder Annuity Trust, or CRAT) or a percentage-based distribution (Charitable Remainder Unitrust, or CRUT).
- They are often funded with highly appreciated assets, as the trust is generally exempt from income tax and can sell contributed assets without immediate tax at the trust level. Income is then taxed to the beneficiary as distributions are received under IRS ordering rules.
- The 2026 one-time election to fund a CRT or charitable gift annuity through a QCD is limited to $55,000 per taxpayer, indexed for inflation. A caveat, funding a CRT with only $55,000 is generally impractical from an economic and administrative standpoint as most charities have CRT minimums well above that threshold.
Charitable Lead Trust (CLT)
A Charitable Lead Trust (CLT) works in the opposite way: the trust pays income to charity for a period of years, with the remaining assets eventually passing to family members or other beneficiaries. CLTs are often used to reduce gift or estate taxes while fulfilling charitable goals.
- A Grantor CLT provides an income tax deduction to the donor at inception.
- A Non-Grantor CLT provides a gift or estate tax benefit and is commonly used in wealth transfer planning, particularly in lower interest rate environments.
Both CRTs and CLTs are irrevocable structures that require careful drafting and coordination between legal, tax, and financial advisors. They are generally best suited for donors with significant assets and long-term planning objectives.
Section 8: Giving is a Coordinated Strategy
The most effective charitable strategies are not implemented in isolation. They work best when tax planning, investment management, estate design, and personal intent are coordinated within a single framework. When aligned, charitable planning becomes more efficient and intentional, maximizing the impact of giving while preserving greater long-term value for the family.
Here is a practical summary of when each tool tends to be most effective:
| Strategy | Best Fit |
|---|---|
| Annual gift exclusion | Anyone with assets to transfer to family; routine; use every year |
| Lifetime exemption planning | Estates above $15M (individual) or $30M (married couple); portability planning for all estates |
| Qualified Charitable Distribution | IRA owners age 70½+ who give to charity and / or want to reduce RMD income |
| Donor-Advised Fund | Donors with variable income, appreciated assets, or who want to bunch deductions |
| Appreciated asset donation | Anyone with long-term appreciated securities or property and charitable goals |
| Charitable Remainder Trust | Donors who want an income stream from assets while benefiting charity |
| Charitable Lead Trust | High-net-worth families seeking to pass wealth to heirs while benefiting charity |
Ready to Make Your Giving Work Harder?
These strategies are most powerful when they are coordinated with your complete financial picture.
The Goodman Financial team serves individuals, families, and business owners across Houston who are looking for thoughtful, tax-efficient financial planning and investment management. We combine fiduciary wealth management with deep in-house CPA expertise to build plans that hold up at tax time, not just in concept. If charitable giving is a meaningful part of your life or your legacy, we would like to help you build a strategy that reflects that.
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Goodman Financial is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
