By Marianne Requarth, Director, Development
As we start 2026, several IRS updates and new tax laws can influence how your clients approach charitable giving. Below is a practical guide to help you talk with clients about the 2026 updates and how they connect to philanthropy in the year ahead.
Social Security Cost‑of‑Living Adjustments (COLA)
The Social Security Administration implemented a 2.8% cost‑of‑living increase for 2026. This adjustment is tied to inflation and affects tens of millions of retirees, many of whom are active charitable donors.
Why this matters for charitable giving:
Retirees are among the most generous givers, donating to charity at higher rates than younger age groups. When discussing Social Security benefits with your clients, it’s a natural time to bring up charitable planning for 2026 and beyond. An increase in benefits could make retirees more comfortable committing to regular charitable contributions or exploring more strategic ways to give.
Updated Tax Brackets
Tax rates still range from 10% to 37%, but the income brackets have shifted for 2026.
Why this matters:
A client’s tax bracket influences how much they can save on taxes through charitable giving. And because 2026 also brings new limits on itemized deductions—specifically a 0.5% floor and a 35% cap—clients may need extra guidance to make sure their giving remains efficient under the new rules.
In 2026, you’ll need to donate at least 0.5% of your adjusted gross income before you can start deducting anything.
- Example: If you make $100,000, the first $500 you give doesn’t count toward deductions.
If you’re in the highest tax bracket, the deduction benefit will be capped at 35%.
- Example: A $10,000 gift saves you $3,500 in taxes.
Qualified Charitable Distributions (QCDs)
For 2026:
- The annual QCD limit has increased to $111,000 per taxpayer.
- The one‑time QCD limit to a split‑interest vehicle has increased to $55,000.
Why this matters:
QCDs allow people age 70½ or older to send money directly from an IRA to a charity. This keeps the distribution out of taxable income and can also satisfy part (or all) of their required minimum distribution (RMD). It’s one of the most tax‑efficient ways for older clients to support charity. QCDs can be directed to certain Dayton Foundation funds, such as designated or discretionary funds, though not to donor‑advised funds.
New Deduction for Non‑Itemizers
Starting in 2026, non-itemizers can deduct up to $1,000 (single) or $2,000 (married filing jointly).
Why this matters:
While the deduction applies only to cash gifts (not stock) and excludes gifts to donor‑advised funds and private foundations, it may encourage more people—especially young professionals—to begin giving charitably. You also might encourage high‑earning clients to share this opportunity with their adult children. The Dayton Foundation can help by providing eligible fund options and family engagement opportunities.
Higher Standard Deductions for 2026
For 2026, the standard deduction is:
- $16,100 for single filers
- $24,150 for heads of household
- $32,200 for married couples filing jointly
Why this matters:
Whether clients use the standard deduction or choose to itemize is central to their charitable tax strategy. Itemized deductions, including charitable gifts, won’t receive a tax benefit unless they meet the standard deduction threshold. Therefore, it might make sense for your clients not to itemize to receive the new deduction that is available for non-itemizers outlined above.
Another popular option might be to use a “bunching” strategy, particularly if you have clients who donate substantially more than the $1,000 (or $2,000 for couples) but still don’t meet the standard deduction threshold. To help your charitably inclined clients get over the tax deduction threshold, you may want to recommend that they bunch their charitable donations to their Dayton Foundation fund. This allows your clients to combine multiple years of their typical annual gifts into a single tax year and itemize their deductions to receive a larger deduction in the year when it’s most needed. In the other years, they can switch to the standard deduction. An advantage to bunching is that your clients receive the tax benefit in the year when they make their contribution, but they can choose to distribute these funds to charities over multiple years.
For more information on how The Dayton Foundation can help you help your clients maximize their charitable giving in 2026, contact me, Nakia Lipscomb or Michelle Lovely at (937) 222-0410.