Tax advisors say wealthy Americans should consider ramping up charitable donations before the end of 2025 to take advantage of tax benefits that will shrink once new rules from Trump’s so-called "Big Beautiful Bill" take effect in 2026.
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The bill aims to limit the tax benefits of charitable giving for high-income Americans. The new “floor” and a “ceiling” on deductions could reduce the overall tax break for large gifts.
“If you’re thinking about making a big gift, or you know you have a charity that you want to be supportive of over the next couple years, and you got the cash right now, this is the time make a big gift,” Dan Griffith, director of wealth strategy at Huntington Private Bank, told CNBC [1].
Financial advisors expect a year-end rush of donations as high earners look to lock in current benefits before the new restrictions take hold.
How will this change impact top earners?
Starting in 2026, donors who itemize their returns will only be able to deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI).
Griffith explained that a household with an AGI of $400,000 that makes $10,000 of charitable donations in 2026 will not be able to deduct the first $2,000 in giving.
"Smaller donations may no longer reduce your tax bill unless they clear this new threshold. For example, if your AGI is $200,000, only gifts above $1,000 would be deductible," said DAFgiving360 [2].
On top of that, taxpayers in the top 37% bracket (those earning $609,351 and up in 2024) will see a second hit: their deduction will be reduced by 2/37ths of its value, lowering the effective tax benefit to 35%.
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While the changes may sound modest, they add up quickly for major donors. These new limits could be particularly challenging for entrepreneurs who often donate after selling a business to offset a high-income year.
“We have a lot of our clients [with] liquidity events. I think in every case, the year they had the liquidity event, they made charitable contributions,” said Todd Kesterson, who leads the private client business at Kaufman Rossin, to CNBC. “But now it’s kind of the worst year to make them because of the first half percent is not deductible.”
Here’s what to do if you’re impacted by the changes
Advisors are urging wealthy donors to frontload or “bunch” their giving in 2025, meaning it may make more sense to donate several years’ worth of planned gifts now instead of spreading them out.
Kesterson told CNBC that top earners should consider bunching their donations, such as giving $500,000 now rather than contributing $100,000 annually over five years.
Doing so allows them to claim the full deduction before the new limits apply. Even if a donor can’t make a contribution before the deadline, a single large gift in one year will still be better than smaller, repeated donations spread out over several years that trigger the 0.5% floor multiple times, said Griffith.
For older donors, there’s another workaround: those aged 73 or older can use their required minimum distributions (RMDs) from retirement accounts for charitable giving. “It’s, in effect, a 100% deduction, because it’s reducing their income, dollar for dollar,” Kesterson said.
While the coming tax rules won’t end charitable giving among the wealthy, they do make timing more important. For high earners, planning ahead could mean the difference between maximizing a deduction and losing out on thousands in potential savings. High-earners who act strategically can ensure their generosity benefits both their favorite charities—and their bottom line.
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