New Charitable Giving Rules Take Effect in 2026

The One Big Beautiful Bill Act (OBBBA), signed into law this past July, introduces significant changes to charitable giving tax benefits, all of which take effect in 2026. While these changes don’t eliminate the benefits of charitable giving, they do reduce them, thereby requiring more strategic planning to maximize both your philanthropic impact and tax efficiency. Here’s what you need to know, and more importantly, what you can do about it right now.

Three Key Changes Starting in 2026:

$1,000 Deduction for Standard Deduction Filers: Non-itemizers will be able to deduct up to $1,000 (single) or $2,000 (married filing jointly) in charitable cash contributions. While this is certainly an increased benefit, it doesn’t apply to anyone filing an itemized tax return, therefore limiting its usefulness, particularly for those in high-tax states such as California.

0.5% AGI Floor for All Itemizers: For any taxpayers currently filing an itemized tax return, your future charitable deductions will only count for amounts exceeding 0.5% of your adjusted gross income (AGI). For example, if you have $200,000 in AGI, you must give more than $1,000 before receiving any tax benefit on the next dollar. In other words, only amounts above this 0.5% threshold will be considered deductible.

35% Cap for High Earners: For those in the 37% tax bracket, your itemized deductions will be capped at a 35% tax benefit instead of the full 37%. This effectively reduces the tax incentive for charitable giving among higher earners

Key Takeaway for 2025 Planning

All three changes take effect in 2026, creating a narrow but powerful opportunity to maximize your current tax benefits this year. One possible solution may be through the use of Donor-Advised Funds (DAFs), as they allow for strategic bunching of your charitable gifts. These are particularly best funded through the use of low-basis stock, as they receive the added benefit of avoiding capital gains taxes as well.

Through the use of DAFs and contributing multiple years’ worth of gifts in 2025, you can:

Claim the full charitable deduction under today’s more favorable rules

Avoid the 0.5% AGI floor that begins in 2026

High earners can capture the full 37% deduction before the cap takes effect

Maintain complete flexibility to direct grants to your favorite charities over multiple years

As your financial advisors, our role is to help you navigate these changes while staying focused on what matters most: supporting the causes you care about. The new rules don’t change the importance of charitable giving, but they do reward those who plan strategically.

If you have questions about how these changes might impact your giving strategy, or want to discuss setting up a donor-advised fund before year-end, please feel free to reach out. We’re here to help ensure your charitable giving remains both personally meaningful and tax-efficient in the years ahead.

Safeguarding Your Information from Recent Data Breach

In today’s digital age, protecting personal information is more important than ever. During the first half of August, it became public that a significant data breach affected nearly 2.9 billion records from a company called National Public Data (NPD). While this might sound alarming, there are practical steps you can take to safeguard your financial information and minimize any potential risks.

Keep an Eye on Your Accounts: Regularly checking your annual credit report, bank statements, and investment account statements is a simple yet effective way to ensure everything is in order. By staying aware, you can quickly spot and address any unusual activity.

Rest assured, your accounts that are managed by Farther and custodied at either Schwab or Fidelity are covered by each custodian’s Customer Protection Guarantee. Both institutions promise to both protect your personal information and accounts, and will reimburse accounts for any losses due to unauthorized activity. If you notice any such activity please both make us aware, as your financial advisors, as well as the custodian.

Consider a Credit Freeze: A credit freeze is a useful tool that can help prevent identity theft. When you freeze your credit, it adds an extra layer of protection by stopping new credit accounts from being opened in your name without your permission. Such a freeze does not affect any current our outstanding credit lines and can be easily “thawed” should you seek any new forms of credit.

Setting It Up: You can easily place a freeze with each of the three major credit bureaus (Equifax, Experian, and TransUnion). This is best accomplished online as claiming the profile tied to your SSN, with a username and password, is also an important step in fraud avoidance.

Important Note: Electing a credit freeze with each bureau is FREE and does NOT require opting into any paid subscription-based models.

Of the three bureaus, Experian is particularly confusing as they have a paid credit monitoring service called “CreditLock”, which is NOT a credit freeze. To elect a freeze with Experian, navigate to the “Help Center”, under your profile icon. Once there, under the “Quick Actions” section click on “Manage Security Freeze” to opt into a credit freeze.

Managing the Freeze: Whenever you need to apply for new credit, like a mortgage, car loan, or credit card, simply lift the freeze, or schedule a “Credit Thaw”. Remember, you will need to do this for all THREE credit bureaus. Then, once your credit report is pulled you can refreeze your credit once more.

Minor Children: One final note on this topic, if you have minor children, is to elect a “Protected Consumer Freeze” on their behalf. This does have more complexity, given it is on behalf of another individual, but will protect your children’s credit profiles from undiscovered fraud. Further Information is contained within each of the following links for each credit bureau. (Minor Child Info: Equifax, Experian, and Transunion)

Stay Cautious with Emails: Phishing scams can be more common after a data breach. Be cautious with emails or messages that ask for personal information or contain unfamiliar links. A little extra vigilance can go a long way in keeping your information safe.

Taking these simple, practical steps can help you stay secure without adding unnecessary stress. If you have any questions or need assistance with any of these measures, we are here to help.