How the 2026 Tax Changes Could Impact Your Philanthropy – Wabash Valley Community Foundation

Big Changes Are Coming in 2026:

Here’s How They May Impact Your Giving

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces significant updates to the tax code, bringing greater certainty to tax and estate planning. These changes are designed to make planning for the future easier and more predictable. However, they also introduce new rules that may affect how and when you give to the Wabash Valley Community Foundation and the other causes you care about.

Some of these updates present exciting new opportunities for charitable giving, while others may bring challenges depending on your income level and giving strategy. Understanding the potential impact now can help you make the most of your philanthropy in the years ahead.

What You Need to Know:

A More Predictable Landscape for Tax and Estate Planning

Several key provisions from the 2017 Tax Cuts and Jobs Act were set to expire at the end of 2025. The OBBBA makes many of them permanent, providing clarity for long-term planning:

Estate and gift tax exemption increases to $15 million per person (or $30 million per couple) starting in 2026
Standard deduction increases to $15,750 for single filers and $31,500 for married couples in 2025
Top income tax rate remains at 37% (instead of reverting to 39.6%)

This added stability makes it easier to plan larger gifts and legacy contributions with confidence.

New Opportunities—and New Considerations—for Charitable Giving

New Deduction for Nonitemizers

Starting in 2026, even if you take the standard deduction, you can deduct up to $1,000 (single) or $2,000 (married filing jointly) for cash gifts to public charities.
Note: Donor-advised funds and private foundations do not qualify.

Why this matters:
Since many donors no longer itemize, this new deduction offers a tax-smart reason to give to qualified organizations like the Wabash Valley Community Foundation.

Giving Floor for Itemizers

If you itemize, you’ll now need to contribute at least 0.5% of your Adjusted Gross Income (AGI) before charitable deductions begin to count.
For example, if your AGI is $100,000, the first $500 of donations won’t be deductible.

What this means for you:
It may be wise to bundle your giving by combining multiple years’ worth of donations into one larger gift to ensure you surpass the deduction threshold and maximize your tax benefit.

💡 Deduction Limit for High-Income Donors

If you’re in the top tax bracket (37%) and itemize deductions, your total charitable deductions will now be capped at 35% of your income.

What to consider:
If you’re planning a significant gift, doing so before the end of 2025 may allow you to take advantage of the higher deduction limit while it still applies.

Permanently Higher Deduction Limit on Cash Gifts

The ability to deduct cash donations up to 60% of your AGI, originally temporary under the 2017 law, is now permanent.

Our advice:
While this is great news, don’t overlook non-cash giving strategies. Work with your advisor to decide whether appreciated assets or other approaches may be more beneficial in your unique situation.

New Deduction for Donors Age 65+

From 2025 through 2028, donors aged 65 and older can take an additional $6,000 deduction, regardless of whether they itemize.

Phase-out begins at:

$75,000 (single)
$150,000 (married filing jointly)

Why it matters:
This could create extra room in your budget for charitable giving during retirement.

What You Can Do Now:

Tax benefits may not be the main reason you give, but they can shape how and when you give. Strategic planning today can help you maximize your impact tomorrow.

Consider these next steps:

If you’re in a higher tax bracket, talk to your financial advisor about giving before the end of 2025 to take advantage of current deduction rules.
If you give annually but won’t meet the new deduction floor, consider “bunching” donations into one larger gift to boost your tax savings.
If you don’t itemize, don’t forget the new deduction available for cash gifts starting next year.
If you’re 65 or older, talk with your advisor about how the new $6,000 deduction might enhance your giving power.

Let’s Talk About What This Means for You

We’re here to help. Whether you have questions about the new rules, are considering a legacy gift, or want to make a lasting impact in your community, the Wabash Valley Community Foundation is ready to support you and your financial team.