Your Top Earning Donors Need to Donate Before 2026 

By: Peter Frerichs

We are two months away from 2026. Another eventful year in the books, and for non-profits, November and December are critical for one reason alone: 

There are more advantageous tax benefits for charitable contributions for affluent donors in 2025 than in 2026.   

Moving into next year, new tax and spending legislation poses challenges for high-income donors in two significant ways: 

1. Beginning in 2026, individuals who itemize deductions will only be able to deduct charitable contributions exceeding 0.5% of their adjusted gross income. For example, a household with an adjusted gross income of $400,000 that pledges $10,000 to charity in 2026 will forfeit the ability to deduct the initial $2,000 of that donation.

2. Those folks in the 37% tax bracket will have their deductions diminished by 2/37ths of the donation amount. This change effectively lowers the tax benefit from 37% to 35%. This might seem like a minor change, but think of it this way: 

Someone notches $10 million in adjusted gross income after selling their business and contributes $1 million to reduce their tax liability. If this occurs in 2025, the person would receive a tax reduction of $370,000. Beginning in 2026, however, the deduction would be reduced by $20,000 due to the ceiling and by an additional $50,000 due to the floor (point #1).

Important Information for Established Repeat Donors

If you have a donor who has been giving a somewhat fixed amount annually - i.e., $100,000 - now is the time to urge them to speak with their financial advisor. It is likely that it would benefit them to give $300,000 (equivalent to the next three years) now rather than continue giving $100,000 annually over the following three years. 

For Top Earners 73 and Older

For this cohort, notwithstanding the upcoming tax adjustments, they can still secure considerable tax benefits by donating their required minimum distributions from retirement accounts. 

What If a Donor Feels Pressed For Time? 

Totally understandable, and let them know that they can contribute to a donor-advised fund (DAF) now and receive an immediate tax deduction while postponing decisions on which organizations to support. 

Moreover, it's generally more efficient to donate appreciated stock (with capital-gains tax advantages) through a DAF than to donate it directly to a charity.

Roughly 500,000 ultra-wealthy individuals, each worth at least $30 million, accounted for $207 billion in donations in 2023. This represented more than a third of the global total for individual contributions. 

Non-profit professionals are not financial advisors. But we can help those who help the causes we work for maximize their gifts by arming them with this information. 

Best of luck over the coming 60 days!