As the end of the year approaches, many donors are considering how upcoming tax law changes could impact their charitable giving strategy. For those who itemize deductions, recent federal legislation will change the way charitable deductions are calculated beginning in 2026. That means gifts made in 2025 may provide greater tax advantages. A donor advised fund at North Texas Community Foundation offers a simple, strategic way to take advantage of current rules while supporting your favorite nonprofits over time.
Key Tax Changes to Note:
>Charitable deduction floor: Beginning in 2026, the first 0.5% of your adjusted gross income (AGI) given to charity will no longer qualify for a deduction, making charitable contributions this year more valuable from a tax perspective. (H.R.1 Section 70425)
Example: A taxpayer with $1 million AGI who donates $100,000 in 2026 would only be able to deduct $95,000. By making the same gift before the end of 2025, the full $100,000 remains deductible.
>High-income deduction limits: Also beginning in 2026, taxpayers in the top bracket will see their itemized deductions reduced by 5.4% of the lesser of their total deductions or the amount of income above the 37% tax bracket. (H.R.1 Section 70111)
Example: A taxpayer with $1 million AGI and a $100,000 charitable gift would see their deduction reduced to $89,865 after both new limits are applied. If that same gift is made in 2025, the full $100,000 remains deductible.This would result in $3,750 additional tax expense in 2026 before adjusting next year’s tax brackets for inflation.
>Higher charitable giving limits from 2017 have been made permanent: Those limits are 60% of AGI for cash gifts and 30% for non-cash gifts, with the ability to carry forward unused deductions into future years.
With these upcoming changes in mind, one strategy to consider is “bunching” future charitable giving into the current year. Establishing or adding to a donor advised fund at NTCF allows you to take full advantage of 2025’s favorable tax treatment while maintaining the flexibility to recommend grants to the nonprofits you care about over time. Always consult with your tax advisor to determine the best strategy for your circumstances and let NTCF be your trusted partner in turning generosity into meaningful change.