Make A Plan To Maximize Your Charitable Impact Under The New Tax Law (Tax Tips!)

Sari McConnell's article about Maximizing Your Charitable Impact Under the New Tax Law for donors was published in the Kenwood Press, October 1, 2025, a Sonoma Valley news publication. Below is a reprint of the tax tips article.

There’s never been a better time to support your favorite nonprofits in Sonoma Valley. According to a 2024 Wall Street Journal article, “[T]he side effects of a charitable act may include a better mood, lower blood pressure and a longer life.”

It’s common for people to develop a retirement plan, but few apply that same intentionality to their charitable giving. With the new 2025 tax law, now is a particularly important moment to think strategically about giving with purpose.

The new tax law impacts charitable gift deductibility starting in 2026. It’s enough of an 'ouch' to spring you into action — but with planning, you can give more tax-efficiently than ever, unleashing your generosity.

While I’m a nonprofit fundraising expert who helps nonprofits grow their revenue, I turned to my tax advisor and financial planning professional when developing the following guidance for donors. I strongly recommend you do the same, as everyone’s personal financial situation is unique.

If you’re over 70½, make qualified charitable distributions (QCDs)

Donating directly from your IRA is the single most tax-efficient way to give if you’re 70½. These qualified charitable distributions (QCDs) are not taxed as income; count toward your required minimum distribution (RMD) if you’re 73+; and can be as easy as requesting a checkbook for your IRA account.

In 2025, you can donate up to $100,000 per person. In 2026, it’s $108,000. A cash donation is far less tax beneficial under the new law.

If you’re not yet 70½, open a donor-advised fund (DAF)

Too young for QCDs? Opening a donor-advised fund (DAF) is the next best move. A DAF gives the donor an immediate tax deduction when funds are contributed, not when granted, to your favorite causes.

Why is this important now? Under the new law, starting in 2026, the first 0.5% of your adjusted gross income (AGI) donated to charity is no longer deductible if you itemize.

For example, if your household’s adjusted gross income is $300,000, the first $1,500 that you donate each year is not deductible.

Bundling multiyear gifts into a DAF means that 0.5% floor only dings you once, rather than every year. Plus, you’ll be itemizing instead of taking the standard deduction, so you get full tax credit after the 0.5% for being charitable.

Even better? Fund your DAF in 2025. This sidesteps the 0.5% ding that would have hit you in 2026.

To recap, DAFs allow you to: 

– Bundle several years of giving into one tax year to maximize your deduction; 

– Avoid the 0.5% AGI floor in future years; 

– Distribute the money to charities whenever you’re ready; 

– Are easy to set up by asking your financial advisor; 

– Get you credit for giving even if you don’t itemize.

Starting in 2026, taxpayers who take the standard deduction can deduct up to $1,000 or $2,000 (for individuals and those married-filing jointly, respectively) for cash gifts without itemizing. If you have a simpler return, you can now support your favorite causes while receiving a tax benefit in return.

Updated SALT cap

One of the biggest changes is the expanded SALT (state and local tax) deduction cap. For locals with AGI under $500,000, the cap rises to $40,000 — up from $10,000.

Many of us will once again benefit from itemizing our deductions, including charitable gifts.

Pay attention to the strategies above when developing your charitable giving plan.

Talk to your tax advisor to ensure your charitable giving plan complies with all tax laws. Your financial advisor can help open a DAF and also show you how easy it is to give generously from your IRA.

Sari McConnell, CFRE, MBA, is a strategic fundraising expert whose firm, Donor Boom, helps nonprofits grow their revenue. She works with nonprofit board members, executive directors, and development staff in Sonoma Valley and beyond to ignite generosity. She is also an avid reader of the Kenwood Press.