Why top earners should donate before 2026

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide for the high-net-worth investor and consumer. subscription To receive future issues, directly to your inbox.

Lawyers for the wealthy advise clients to increase their charitable giving this year to take advantage of tax benefits that will decrease in 2026.

President Donald Trump’s omnibus tax and spending bill included provisions that reduce the tax benefits of charitable giving for high-income earners. Since the provisions will not take effect until next year, advisors to wealthy donors recommend pooling their donations this year to take advantage of the tax benefits.

“If you’re thinking about making a large gift, or you know you have a charity you want to support over the next two years, and you’ve got the cash now, now is a good time to make a large gift,” said Dan Griffiths, director of wealth strategy at Huntington Private Bank.

The bill hinders higher-income donors in two ways. First, starting in 2026, itemizing donors will only be able to deduct charitable contributions that are more than 0.5% of their adjusted gross income (AGI). On this floor, a family has a total public income of $400,000 According to Griffith, someone who makes $10,000 in charitable donations in 2026 will not be able to deduct the first $2,000 in donations.

Second, the deduction for taxpayers in the 37% tax bracket will be reduced by 2/37^y of value. This ceiling reduces the actual tax benefit from 37% to 35%.

While the floor and ceiling changes may seem small, they have noticeable ramifications for those with higher incomes. For example, consider an entrepreneur who has $10 million in AGI after selling a company and donates $1 million to reduce his tax liability. If this were done in 2025, the businessman would receive a tax break of $370,000, according to Griffiths.. Starting in 2026, the deductible will be reduced by $20,000 thanks to the ceiling and another $50,000 due to the floor, he said.

These limits are particularly important to entrepreneurs, who often make large donations when their AGI peaks in order to reduce their tax burden, according to Todd Kesterson of Kaufman Rossen, who leads the accounting firm’s private client business.

“We have a lot of our clients because they have liquidity events. I think in every case, in the year they had a liquidity event, they made charitable contributions,” he said. “But now is kind of the worst year to make it because the first half percent is not deductible.”

Kesterson expects a wave of donations before the end of the year to avoid the double whammy.

He said higher earners who are interested in charitable giving should consider pooling their donations, such as donating $500,000 now instead of contributing $100,000 a year over five years.

If they can’t donate before the end of the year, they’re still better off making one large donation rather than spreading it out over several years and triggering the 0.5% threshold multiple times, according to Griffith.

Despite the tax changes, top earners age 73 or older can still get significant tax savings by donating the minimum required to withdraw from a retirement account.

“It’s actually a 100% deduction, because it reduces their income, dollar for dollar,” Kesterson said of qualified charitable distributions.

For donors who are pressed for time with 2026 quickly approaching, Justin Volesko of Cerity Partners family office recommends contributing to a donor-advised fund. With DAF, donors get an upfront discount and can wait to decide which charities to fund. It’s also easier and faster to donate appreciated stock — which Volescu prefers for tax savings on capital gains — to a DAF rather than a charity, he said.

While the GOP bill encourages giving by low- and middle-income donors, the wealthy account for the majority of charitable giving. Research firm Altrata estimates that about 500,000 wealthy individuals worth at least $30 million will account for $207 billion in donations in 2023, more than a third of all donations from individuals in the world.

Kesterson said the new tax system is more likely to be an inconvenience for wealthy clients than a real obstacle to charitable giving. Griffith expects some will wonder if the donation is worth it.

“It certainly won’t motivate him,” he added.