Giving to charity this year? The rules changed
October 12, 2026
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Show Notes
Eddie and Betty's Conversation
Welcome back to The American Retirement Advisor. I'm here with Eddie, as always, and we are talking today about something that honestly caught me off guard when I first read it — a change to how charitable giving works for taxes starting this year, 2026. Ian Schaeffer wrote a really sharp piece on this, and Eddie, I want to get into it because I think a lot of people are going to be surprised.
Thanks for having me. And yes, it got me too, which is saying something because I read tax updates for fun.
Of course you do. Okay, so set the scene for me. What changed?
So the new federal tax law does three things to how charitable gifts are deducted, and all three kick in for tax year 2026. That means this giving season — this December — is when it starts to matter.
Three things. Give me the quick version.
First, if you itemize, there is now a floor on charitable deductions. The first half a percent of your adjusted gross income in charitable gifts is just not deductible anymore. Second, if your taxable income is in the top bracket, your itemized deductions get trimmed. And third — and this one is new in a good way — if you don't itemize at all, you can now deduct up to a thousand dollars of cash gifts, or two thousand on a joint return.
Wait. People who take the standard deduction get something now?
For the first time, yes. Cash gifts only, up to that limit, and gifts to donor-advised funds don't count toward it. But yes, that's new.
Okay, I want to come back to that. But first — this floor thing. Half a percent doesn't sound like a lot, and then I ran the numbers and my eyes got wide. Walk me through what that actually looks like.
Ian uses a great example in the article. A married couple, $300,000 of adjusted gross income, they give $10,000 to their church and some local causes. Half a percent of $300,000 is $1,500. So that first $1,500 of their giving is just gone — not deductible. They deduct $8,500 instead of $10,000.
Every single year from now on.
And it scales. At $600,000 of AGI, that nondeductible slice doubles to $3,000.
So the more you earn, the bigger the toll.
Ian calls it a toll, which I thought was exactly the right word. The charity gets the same gift. The good it does doesn't change. But there's now a cost baked into the deduction side, every year, that wasn't there before.
And then there's this top-bracket trim on top of that?
Right. Above $768,700 of taxable income on a joint return — $640,600 if you're single — the IRS reduces your itemized deductions by 5.4% of the smaller of two numbers: your total itemized deductions, or the amount your income is over that line.
That is a lot of math happening to people who are just trying to be generous.
It is. And here's the thing — the article's point isn't that giving is now a bad idea. It's that the route your gift takes matters more than it used to.
That's where the QCD comes in, right? And I want you to explain this one carefully because I think people have heard the letters but they're fuzzy on how it actually works.
A qualified charitable distribution. You're 70 and a half or older, you have an IRA, and instead of writing a check to a charity, the money goes directly from your IRA custodian to the charity. Never touches your hands, never shows up in your income.
So it just skips you entirely? You're not deducting it?
There's nothing to deduct. It was never income. That distinction sounds subtle until you realize what it skips.
Okay, what does it skip?
Both of the new rules. The half-percent floor and the top-bracket trim both apply to deductions. A QCD isn't a deduction. So neither rule touches it.
Wait, really? The whole new law just doesn't touch it?
Correct. Go back to that couple giving $10,000. If one of them is 70 and a half and sends that $10,000 directly from an IRA, all $10,000 stays out of their income. Not an $8,500 deduction. Zero income.
That is a meaningful difference.
And they get that result whether or not they itemize. A lot of retirees take the standard deduction and get zero tax benefit from their charitable gifts under the old system. The QCD works for them too.
So for retirees who've been writing checks for years and getting nothing back on their taxes, this is new.
This option isn't new, but the new rules make it worth more relative to cutting a check than it used to be.
There's also something in the article about the RMD. That part kind of blew my mind.
So if you have an IRA and you're at the age where you have to take required minimum distributions, the QCD counts toward that. You're satisfying your distribution requirement with money that went to charity and never hit your income.
So you would've had to pull it out anyway.
And paid tax on it. Instead it goes to the cause, counts as the distribution, and you never see the income. For a certain kind of charitable retiree that's a genuinely powerful combination.
What's the limit on how much you can give this way?
For 2026, it's $111,000 per person. And if a married couple each has their own IRA, they each get their own $111,000. That's from IRS Notice 2025-67, so those numbers are straight from the source.
That is not a small number. Okay, but nothing is this clean without some catches. What are the rules you can trip over?
There are a few and they're the kind of thing that really bites people in December. First one: you have to be 70 and a half on the day the money leaves the IRA. Not the year you turn 70 and a half. The actual day.
Oh, that is specific.
Second: the custodian sends the check directly to the charity. If the check is made out to you and you forward it along, it's a taxable distribution. You've already lost the benefit.
So don't try to be the middleman.
Third: not every charity qualifies. Donor-advised funds and supporting organizations are specifically excluded. And the article mentions you still need the same written acknowledgment from the charity you'd need for a regular deductible gift.
Get the receipt. Okay. What else?
IRAs only. The gift has to come from an IRA. Not from an ongoing SEP or SIMPLE IRA. And then the big one for December: the money has to leave the IRA by December 31 to count for 2026. Ian's article specifically says the last week of December is not the week to start this process.
Because custodians need processing time.
Right. Call them in November. Or now. Not December 28.
I feel like there should be a flashing sign on the article that just says START EARLY. Okay, can I bring up the other thing I found kind of stunning? The Medicare piece.
Yes, please bring it up because more people need to know about this.
So the article mentions that keeping your income lower through a QCD can affect things like how much of your Social Security is taxable, and — and this is the part that got me — the income-based surcharges on Medicare premiums look back at your tax return from two years earlier.
That two-year memory is real and it matters. What you do in 2026 can show up in 2028.
So a charitable decision you make this December isn't just about this year's tax bill.
It's a domino that lands two years from now. Which is why Ian frames it the way he does — it's not just about deductions, it's about what your income number does to everything else.
Okay, let's talk about people who are not yet 70 and a half, because I don't want them to feel like this whole episode has nothing for them.
The new non-itemizer deduction is theirs. Up to $1,000 of cash gifts, or $2,000 on a joint return, even if you're taking the standard deduction. That's something they didn't have last year.
And for people who do itemize but aren't at the QCD age yet?
The half-percent floor means the timing of gifts is now worth thinking about. Whether a gift lands in one year versus another can change how much of it is deductible. That's a conversation for your tax preparer, because the right move depends on your specific numbers.
So it's not a one-size answer.
Never is. And those specifics are exactly the kind of thing I'd bring to your CPA or your advisor rather than trying to reverse-engineer it yourself.
Can I just say what I think the emotional core of this article is? Because I think Ian put it really well.
Go ahead.
He says people rarely ask how to give less. They ask how to make what they give go further. That's it. That's the whole thing. The giving doesn't change. The cause doesn't change. You're just choosing the smarter road to get there.
And if you fall into that bracket we were just talking about -- IRA in hand, past that age threshold -- the path this year is pretty clear: send it directly from the account.
Let me ask you one more thing, because I want to make sure people understand this mechanically. The charity gets the same dollars either way, right?
They don't care how it got there. Your church, your local food bank, whoever it is — they get the same check. What's different is entirely on your side of the tax return.
The route, not the destination.
Ian said it better than I just did, but yes.
One thing I keep thinking about — are there rules here that would be easy to get wrong in the setup? Like calling the custodian and saying the wrong thing?
Getting that language right matters, making sure the check goes to the charity directly, confirming your charity qualifies — these are the details where having your advisor loop in with you before you call is worth a lot. Our team at American Retirement Advisors knows how to walk through the setup so nothing falls through.
And timing, right? Because December is closer than it feels.
If you're listening to this in fall, you have time. If you're listening when it's already mid-month and you haven't started, call tomorrow morning. Not next week.
The specific mechanics of how your custodian handles this, and whether your particular situation checks all the boxes, that's really a question for your advisor and your CPA together.
Which is the right answer. Not because we're dodging it, but because getting it wrong costs you the benefit.
And this year of all years, the difference between writing a check and routing it from an IRA is bigger than it's ever been.
New rules, new math. Same generosity, just with better logistics.
So if that scenario Eddie just described fits you -- the age, the IRA, the giving habit -- this is really the call to make before December. Reach out to your advisor, loop in your CPA, and make sure the giving you're planning to do is working as hard for you as it is for the people you're trying to help. You can reach American Retirement Advisors at 602-281-3898. We are so glad you spent this time with us today.