Happy New Year!
There’s a lot trending as 2026 rolls in. Our team closely monitors developments that impact charitable giving. We share the curated highlights with you, which saves you time as you keep up with everything else related to your clients’ tax, financial and estate planning matters.
Here’s what’s happening as the new year dawns:
- Don’t get caught off guard by 2026 tax adjustments – including Social Security COLA increases, higher standard deductions, updated tax brackets, QCD limits and new non-itemizer charitable deductions. Each of these changes can impact the philanthropic strategies you recommend to your clients. San Diego Foundation (SDF) is here to help translate technical tax changes into meaningful charitable outcomes for your clients.
- Even after the flurry of “bunching” activity at the end of 2025, donor-advised funds remain a powerful planning tool despite the new charitable deduction floor and cap that took effect in 2026. SDF donor-advised funds are especially valuable to your clients thanks to our team’s local expertise, the administrative simplicity we offer and our ability to support a client’s evolving legacy and estate planning goals.
- We are always happy to share realistic case studies illustrating how Qualified Charitable Distributions can reduce a client’s taxable income while supporting meaningful philanthropy in retirement. Notably, our team is happy to provide examples of language you can use to explain to a client why QCDs cannot flow into donor-advised funds and how alternative SDF programs and funds can still meet the client’s goals. Work with our team to turn complex tax rules into compliant, values-driven charitable strategies.
Checklist for 2026 Charitable Tax Rules
Well before 2025 made way for 2026, you were no doubt already tracking the various IRS thresholds that are subject to adjustment, as well as the new tax laws’ impact on planning techniques. But have you thought about how each of these thresholds might relate to your clients’ charitable giving? Here are pointers to keep handy as you inform your clients about changes in 2026 and help them tee up their charitable giving plans for the coming year.
Social Security COLA Increases
The Social Security Administration announced a cost-of-living adjustment (COLA) increase effective January 1, 2026. This increase reflects inflation’s trajectory and affects many retirees who also engage in philanthropy.
Importance to charitable giving: Retirees are a unique group when it comes to tools and techniques related to charitable giving. Given that a high percentage of older cohorts give to charity each year, discussing your clients’ Social Security benefits is a logical juncture to also bring up charitable giving plans for 2026 and beyond.
Standard Deduction Increases
For tax year 2026, the standard deduction increased to $16,100 for single taxpayers, $24,150 for heads of households, and $32,200 for married couples filing jointly.
Importance to charitable giving: The standard deduction is a key factor in charitable giving strategies. If a client’s total itemized deductions – including charitable gifts – exceed the standard deduction, they are eligible to itemize. Reviewing this threshold and considering a “bunching” strategy (accelerating multiple years of giving into one tax year) can help maximize charitable support through 2026 and beyond.
Tax Brackets
Though the tax rates remain at a range from 10% to 37%, the income levels that define each bracket for 2026 have shifted.
Importance to charitable giving: Examining tax brackets with clients presents a timely opportunity to discuss their charitable giving strategies. With the new limitations on itemized deductions that took effect in 2026 (specifically the 0.5% floor and the 35% cap), it’s important to help clients plan carefully so that their philanthropy remains tax-efficient.
Qualified Charitable Distributions (QCDs)
For tax year 2026, the per-taxpayer limit for Qualified Charitable Distributions (QCDs) has been increased for inflation to $111,000, up from $108,000 in 2025. And, the limit for a one-time QCD from an IRA to a split-interest vehicle has been adjusted for inflation to $55,000, up from $54,000.
Importance to charitable giving: Because clients age 70 ½ or older can direct IRA distributions to charity without including them in taxable income (a “Qualified Charitable Distribution”), these clients can reduce their AGI and, if applicable, satisfy all or part of their required minimum distributions (RMDs). A QCD to a qualified fund at San Diego Foundation (such as a program, designated or field-of-interest fund, but not a donor-advised fund) remains one of the most tax-efficient ways to support charity.
Non-Itemizer Charitable Deductions
Beginning with tax year 2026, a single-filer taxpayer who does not itemize deductions will be allowed to deduct up to $1,000 in cash donations to qualified charities (excluding donor-advised funds and private foundations). Non-itemizing joint filers may deduct up to $2,000.
Importance to charitable giving: Despite the relative inflexibility of the new deduction (e.g., gifts of appreciated stock don’t count and neither do gifts to donor-advised funds), nevertheless, this provision for non-itemizers could help encourage people to begin their charitable giving journey, especially in the case of young professionals. To that end, you may want to consider mentioning this new deduction to your high-income-earning clients who have adult children. We can help by offering non-donor-advised fund options to receive the $1,000 or $2,000 gifts, as well as offer opportunities for family learning and hands-on involvement.
Why Donor-Advised Funds are Still Essential
For many CPAs, estate planning attorneys and financial advisors, the end of 2025 brought a whirlwind of charitable planning activity among high-earner clients. That’s because many taxpayers wanted to maximize the tax benefits of their charitable donations before the 0.5% “floor” and 35% “cap” on charitable deductions kicked in on January 1, 2026 under new tax laws.
Donor-advised funds (DAFs) in particular played a significant role in many late-2025 planning strategies, as affected taxpayers could transfer assets to a donor-advised fund in 2025, achieve optimal tax results, and then thoughtfully recommend grants to their favorite charities from the donor-advised fund in 2026 and beyond.
So what now? Should you still recommend that your clients establish and use DAFs at San Diego Foundation to organize their charitable giving?
Absolutely yes! Donor-advised funds remain a highly relevant and strategic tool for your clients. The IRS’s new deductibility limits may reduce the marginal tax benefit of giving for some of your clients, but nothing has changed about the donor-advised fund’s broader planning advantages for all of your charitable clients. Here’s why:
- Fundamentally, regardless of tax benefits, your clients’ charitable intent is driven by values, legacy and a desire for community impact. (No one gives away a dollar to save 35 cents.) That’s why you want to offer your clients the most effective charitable planning vehicles available to achieve charitable goals. A DAF often plays a crucial role in a client’s overall philanthropy structure.
- A donor-advised fund still allows clients to separate the timing of their charitable deduction from the timing of their actual grants to favorite charities, thereby preserving flexibility in years when income is unusually high or when planning around liquidity events, even if the deduction is partially constrained under new laws.
- SDF’s donor-advised funds, in particular, provide benefits that extend well beyond the tax code. That’s because of our team’s local expertise, deep knowledge of regional nonprofits, and ability to help your clients align their giving with real community needs.
- When you work with San Diego Foundation, you can confidently recommend a donor-advised fund because you know the client will receive administrative simplicity, top-notch service and plenty of opportunities for deep community connections and multigenerational philanthropy.
In short, donor-advised funds at a community foundation support your clients’ holistic wealth and legacy planning goals. We make it easy for you, as the advisor, to integrate a donor-advised fund into a client’s estate plan, use a donor-advised fund to smooth charitable giving over time as a client’s income ebbs and flows, and lean on the donor-advised fund as a platform for strategic philanthropy that can evolve alongside a client’s unique life and financial circumstances.
Case Study: A QCD Conversion with Margaret
If you know the basics of Qualified Charitable Distributions (QCDs) but have a hard time envisioning exactly what to say and do when they come up in a client conversation, you are not alone.
Whether you are an attorney, CPA, or financial advisor, at some point you will find yourself in the middle of a QCD conversation. Here’s a case study to help you be prepared.
Margaret, a 74-year-old widow and longtime client of your practice, scheduled a meeting early in the year to discuss her charitable giving plans. In the email Margaret sent to set up the meeting, she mentioned that she was now taking required minimum distributions from her IRA, and her taxable income was higher than she expected or needed.
As you reviewed Margaret’s file before the meeting, you were reminded that Margaret had established a donor-advised fund at San Diego Foundation several years ago. You recall from prior conversations that Margaret not only has enjoyed using the DAF to organize her charitable giving to dozens of favorite charities, but she’s also appreciated the many opportunities to tap into the SDF’s events and educational opportunities.
Margaret arrived at your office, and after catching up on each other’s lives lately, Margaret said, “I’ve read about this thing called a Qualified Charitable Distribution. If I’m going to give to charity anyway, I want to understand whether doing a QCD in 2026 makes sense, especially if I want the gift to go through SDF where I already do all of my giving.”
You nod and explain that a QCD does indeed allow individuals like her, who are 70 ½ or older, to transfer funds directly from an IRA to a qualified charity without including that amount in taxable income. You mention that this can be especially powerful after age 73, when required minimum distributions begin, because the QCD can satisfy all or part of the RMD while keeping adjusted gross income lower. “This can help address Medicare premiums, taxation of Social Security and overall tax efficiency,” you continue. “With the annual QCD limit increasing through inflation adjustments to $111,000 in 2026, it’s a timely strategy to consider.”
Margaret was glad to hear all of this. Then she asked, “I already have a donor-advised fund at San Diego Foundation. Can I simply direct my QCD straight into that fund?” You are prepared for this question. It is a common point of confusion. “That’s a great question, and you’re not alone in asking it,” you reply. “Under current IRS rules, unfortunately, QCDs can’t be made to donor-advised funds, even if they’re housed at a community foundation.”
Seeing her puzzled expression, you continue with a broader explanation. “QCDs are limited to certain types of charitable recipients,” you say. “They can go directly to public charities that are ‘operating’ nonprofits, and in limited cases to certain split-interest arrangements like a charitable gift annuity or a charitable remainder trust, subject to specific rules. Donor-advised funds are excluded, evidently because the IRS does not want the money to flow into an account where the taxpayer retains advisory privileges. Donor-advised funds are, of course, entirely dedicated to charity, so the rule does not make much sense. Yet here we are.”
Margaret frowned slightly. “That feels frustrating,” she said. “I love the donor-advised fund because it gives me flexibility and lets me support multiple causes over time.” You acknowledged her concern. “I understand. The good news, though,” you say, “is that San Diego Foundation offers other types of funds that do qualify for QCDs and can still accomplish many of the same goals.”
You go on to explain that instead of directing the QCD to her donor-advised fund, Margaret could direct the QCD to a designated fund at SDF that supports specific charities she already knows she wants to help, or to a field-of-interest fund focused on causes she cares about deeply, such as education or the environment, or to an unrestricted fund to support the region as a whole. “Those types of funds are fully managed by SDF, without your advisory role after setup,” you say, “which makes them eligible recipients of a QCD while still aligning with your charitable intentions.”
Margaret paused, considering the options. “I don’t want to make the wrong choice,” she said. “I also want to be sure the fund is set up properly and really reflects what I care about.” You agree that is precisely the point where collaboration matters most. “This is where I’d recommend looping in SDF,” you say. “They can help us think through which type of fund fits best, provide a fund agreement document, and enable me to fulfill my professional duty to ensure that the structure complies with QCD rules.”
You go on to suggest a joint meeting with a San Diego Foundation representative. “SDF knows the nuances of the fund options and the local charitable landscape,” you explain. “That’s a great match for the legal and tax obligations on my side of the transaction. Together we can help ensure that your QCD in 2026 is clean, compliant and aligned with your values.” Margaret smiled, clearly relieved. “That makes sense,” she said. “I don’t want this to be just about taxes. I want it to be meaningful.”
By the end of the meeting, you and Margaret have agreed on next steps: you said you would review Margaret’s IRA custodian requirements for executing a QCD, and SDF will set up a fund to receive the distribution. The plan will enable Margaret to utilize her required minimum distribution to support the community she loves, reduce her taxable income, and establish a charitable structure with which she feels confident.
As Margaret leaves your office, you can tell that she feels reassured that she didn’t have to navigate the rules alone. The conversation had clarified not only why a QCD in 2026 made sense for her financially, but also why working collaboratively with you and SDF was essential. Together, you and the San Diego Foundation can turn a complex tax rule into a thoughtful charitable strategy that supports both Margaret’s personal financial goals and the broader community she aims to impact.
If Margaret’s situation sounds familiar, or if you anticipate any type of charitable giving conversation with a client, we’re here for you. We are always happy to collaborate as you explore solutions to achieve your clients’ charitable goals. In nearly every situation, we can help. At the very least, we will point you in the right direction.
Pro Tip
As you talk with clients over the coming weeks, keep in mind that tax laws are always subject to change – and sometimes for the better. Case in point related to Margaret’s situation? A small, bipartisan tax law change has been proposed that would allow Qualified Charitable Distributions to be made into donor-advised funds.
Learn More
For more than 50 years, we have partnered with an extensive network of wealth advisors, estate planning attorneys, tax planners and other financial advisors to help high-net-worth clients and families achieve financial planning objectives and charitable giving goals while maximizing tax deductions.
If you want to learn how we can help meet your clients’ financial planning and charitable giving goals, contact me at (858) 245-1508 or jrogers@sdfoundation.org.
