2026 Gift Planning News

New Year Brings Tax Extensions, Changes and Important Incentives for All Givers

As a result of the One Big Beautiful Bill Act (OBBBA) signed into law last summer, many of the provisions of previous law, like the expanded standard deduction amounts and individual tax rate reductions, that were scheduled to sunset at the end of 2025 were extended and carried over to the new year. Now, the vast majority of taxpayers will pay less income tax.

The OBBBA also permanently increased the estate and gift tax exemption to $15 million per person ($30 million for married couples) for 2026. In future years, the exemption (like individual income tax rates) will be indexed for inflation annually.

This year, the standard deduction for single filers rises to $16,100 and $32,200 for those filing jointly. For 2025 through 2028, seniors 65 and older with incomes up to $75,000 ($150,000 for couples) will also receive a “bonus” deduction of $6,000 (subject to phase-out for those with higher incomes). Itemizers may also enjoy the increase from $10,000 to $40,000 for state and local deductions (SALT).

Powerful incentives encourage gifts for nonitemizers through a universal deduction for gifts of up to $1,000 in cash for singles and $2,000 for cash gifts by joint filers. For those who continue to itemize, cash gifts are still deductible up to 60% of AGI for 2026. Additionally, itemizers can claim charitable gifts as a scheduled deduction for tax purposes beyond a floor of 0.5% of the taxpayer’s AGI, and those in a 37% tax bracket will find the tax savings subject to another adjustment which effectively reduces the deduction by about 2%.

Qualified charitable distributions (QCDs) from IRAs have been available for donors since the Pension Protection Act of 2006. With a QCD, eligible donors age 70½ or older have been able to avoid income tax they would have otherwise paid on direct distributions to qualified charitable entities and have those amounts also count toward any required minimum distribution (RMD) for the year.

Beginning in 2023, donors could make a one-time election to fund a charitable gift annuity or charitable remainder trust from an IRA. Payments can be made only to the donor and/or spouse.

As part of the Secure 2.0 Act of 2022, both the QCD limit and the amount eligible for gift annuities and remainder trusts are adjusted for inflation. For 2026, the QCD maximum is $111,000, and the amount eligible for gift annuities and remainder trusts is $55,000.

With all the major financial markets enjoying record highs, RMDs have increased for many Americans. One tax strategy for those 73+ is to make QCDs, which can count toward your required distribution for 2026 and are not considered part of your taxable income. Those over 70½ may also benefit by using the IRA QCD strategy to make direct distributions to charity on a tax-free basis.