A new tax law passed in summer 2025 may affect how you maximize the tax benefits of your charitable contributions beginning in 2026, depending on your unique financial circumstances. We’re highlighting changes for itemizers, non-itemizers and anyone concerned about estate taxes. Contact us if you would like to discuss how the changes may impact your specific situation. 

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 established a Pomona Plan gift annuity with $100,000 in January 2026 to start a stream of secure, fixed payments for her lifetime. At age 75, she is currently eligible for a single-life annuity payment rate of 7.6%. Her AGI in 2025 was $200,000 and she expects a similar AGI in 2026. 

Patricia’s full charitable deduction from the funding the annuity in January 2026 is $33,810. Her total charitable deductions in 2026 are now subject to the new 0.5% of the AGI floor. If she has no other charitable deductions in 2026, the AGI floor would lower her effective deduction by $1,000 to $32,810. 

Another important change in 2026 will affect you if you’re in the very highest income tax bracket (37%): all of your itemized deductions, including your charitable deduction, will be capped at 35% of the value of the deduction. Charitable gifts will still reduce taxable income, but the tax savings will be lower — about $200 less for every $10,000 contributed. 

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 is not subject to the new limitations on itemized deductions discussed above and 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 2026. We’ll be happy to help you consider your options.