A new tax law passed this summer may affect how you maximize the tax benefits of your charitable contributions, depending on your unique financial circumstances. We’re highlighting changes for itemizers, non-itemizers and anyone concerned about estate taxes. But if you itemize your income tax deductions, you may wish to act now before the changes take effect in 2026. 

Itemizers

If you itemize your income tax deductions, there are two new rules that may impact your tax savings beginning in 2026. 

First, the charitable deduction for itemizers will be subject to a new “floor” before deductions begin. Charitable contributions will not be deductible until the total exceeds 0.5% of Adjusted Gross Income (AGI). For example, if your AGI is $200,000, the first $1,000 of your total charitable contributions for the year will not be deductible, but all the rest will. The higher your income, the higher the threshold before deduction begins.

Here’s another example: Patricia wants to establish a Pomona Plan gift annuity but is deciding whether to give $100,000 now or wait until January 2026. At age 75, she is currently eligible for a single-life annuity payment rate of 7.6%. Her AGI in 2025 is $200,000 and she expects a similar AGI in 2026. 

If she funds the gift annuity in November 2025, her charitable deduction is $34,636 and this amount would be fully deductible on her 2025 return. However, if she waits until January 2026, the deduction is subject to the new 0.5% of the AGI floor, lowering her effective deduction by $1,000 to $33,646. 

Another important change in 2026 will affect you if you’re in the very highest income tax bracket (37%): your charitable deduction will be capped at 35% of the value of the contribution. Charitable gifts will still reduce taxable income, but the tax savings will be lower — about $200 less for every $10,000 contributed. This makes 2025 an ideal year for high-income earners to maximize their charitable giving under the current rules. 

Non-Itemizers

Beginning in 2026, in addition to the standard deduction, non-itemizers will be allowed to deduct up to $1,000 in charitable cash contributions and couples filing jointly will be able to deduct up to $2,000. This deduction will reduce your taxable income and save you taxes.

Estate Tax

The new tax law makes permanent the higher exemption from gift and estate taxes. Individuals will be able to pass a total of $15 million in lifetime and estate giving to heirs with no federal tax. At this higher exemption level, 99% of estates will pay no estate tax and receive no tax benefit from charitable gifts through the estate. 

With no tax benefit for charitable giving for most estates, you could consider making a life income gift — such as a charitable remainder trust or charitable gift annuity — which would allow you to receive current income tax savings on your remainder gift while retaining income for your lifetime. 

Contact the Pomona Plan team today at (800) 761-9899 or pomonaplan@pomona.edu with your questions about how the new tax law may impact your tax planning for 2025. We’ll be happy to help you consider your options.