New York Elder Law Attorney
Significant changes to the One Big Beautiful Bill Act (OBBBA) take effect on January 1, 2026. There’s little time, but if you act fast, you might benefit:
Charitable giving tax rules are changing. Only taxpayers who itemize can deduct charitable gifts exceeding 0.5% of ADI. If you already know which organizations you want to support, consider making a few years’ worth of donations in 2025, before these tax benefits shrink.
Charitable Deduction Limits: 2025 vs. 2026 Comparison
| Feature | 2025 Tax Year | 2026 Tax Year |
| Itemizer Deduction Floor | None — full deductions allowed up to AGI limits | New 0.5% AGI floor before deductions allowed |
| Cash Gifts to Public Charities (Itemizers) | Deductible up to 60% of AGI | Still deductible up to 60% of AGI (after 0.5% floor) |
| Non‑Cash Donations (e.g., stock) | Deductible up to 30% of AGI (typical) | Same AGI limits, subject to new floor |
| Non‑Itemizer Charitable Deduction | Not available | Up to $1,000 (single) / $2,000 (joint) for cash gifts |
| Deduction Value Cap (High Earners) | Full value based on marginal rate (e.g., 37%) | Capped at 35% of the gift value |
| Qualified Charitable Distributions (QCDs) | Up to $108,000 (direct from IRA) | Increased to approximately $111,000 |
| Benefit Requirement for QCDs | Must be to a qualified charity with no donor benefit | Same rule applies |
Are you unsure which organizations you want to support? Set up or contribute to a DAF – Donor Advised Fund. You’ll get the deductible contribution this year and the opportunity to distribute grants in the future.
Consider a Charitable Remainder Trust (CRT), which allows for a current-year deduction and provides an income stream. It is also beneficial to a non-spouse IRA beneficiary, as payments can be made over 20 years or until the beneficiary’s life expectancy. It avoids the 10-year payout rule.
If you’re over 70 ½ and have IRA income you don’t need, you can directly donate up to $108,000 in 2025 using a Qualified Charitable Distribution. This satisfies your RMDs and trims taxable income. You can’t use a QCD for a DAF or private foundation.
Gifting Rules are Better in 2025
While the federal estate tax and gift exemptions are now at their highest levels, families with taxable estates may want to utilize some of their exemptions in 2026. You can still give up to $19,000 per person without using your lifetime exemption.
Interest Rates make some planning ideas more attractive. Intrafamily loans allow family members to borrow at lower rates than those offered by commercial lenders. If you already made intrafamily loans in recent years, consider refinancing them at today’s lower rates.
A Grantor Retained Annuity Trust (GRAT) transfers appreciated assets to beneficiaries with minimal gift tax exposure if returns exceed the IRS Section 7520 rate, which must be distributed back to the grantor. This rate has been moving lower in 2025, improving the likelihood of a successful GRAT. Some families choose a short-term GRAT to capitalize on market fluctuations.
A Charitable Lead Annuity Trust (CLAT) follows similar interest rate dynamics. A CLAT provides annual income to a charity for a term, and after the term, remaining assets pass to individual beneficiaries. Lower rates increase the potential remainder amount, making them even more appealing.
The end of the year is a key time to review your retirement and estate plans. Check your Wills, Trusts, Advanced Care Directives, contributions levels, beneficiary designations, and RMDs.
Changes are coming in two weeks’ time – make the most of what’s left of 2025!
Reference: Kiplinger (December 16, 3025) “Your Year-End Tax and Estate Planning Review Just Got Urgent”