If charitable giving is part of your financial plan, what you give and when you give it can make a meaningful difference for both you and the organizations you support.
Most charitable giving is done by writing a check. For families with appreciated investments, a business interest or a large retirement account, other approaches can deliver more to the causes they care about at a lower after-tax cost. Four are used most often.
Gifting appreciated stock
When you donate publicly traded securities you have held for more than one year directly to a public charity, you can generally deduct their full fair market value, and neither you nor the charity pays capital gains tax on the appreciation. Selling the shares first and donating the cash leaves less for the charity and a tax bill for you.
This approach is especially useful for reducing a concentrated or low-basis position. Securities held for one year or less, or that have declined in value, are usually better handled differently.
Donor-advised funds
A donor-advised fund is a giving account sponsored by a public charity. You contribute cash or appreciated assets, receive the tax deduction in the year of the contribution, and then recommend grants to charities over time. Assets in the account can be invested in the meantime.
- Timing. You can make a large contribution in a high-income year, such as the year of a business sale, and distribute the funds to charities over many years.
- Bunching. Combining several years of giving into one year can increase the tax benefit compared with giving the same total evenly.
- Simplicity. One contribution and one receipt, with the sponsor handling recordkeeping.
- Family involvement. Children can be named as advisors or successors.
Contributions are irrevocable, and the sponsoring charity has legal control of the assets, although donor recommendations are normally followed.
Charitable remainder trusts
A charitable remainder trust is an irrevocable trust that pays income to you or other beneficiaries for life or for a term of years, after which the remaining assets go to charity. Because the trust is tax-exempt, it can sell a highly appreciated asset without an immediate capital gains tax and reinvest the full proceeds. The donor receives a partial income tax deduction when the trust is funded, and the payments are taxable to the recipient as they are received.
An annuity trust pays a fixed dollar amount each year. A unitrust pays a fixed percentage of the trust's value, recalculated annually. These trusts must meet specific IRS requirements and should be designed with an attorney.
Qualified charitable distributions
IRA owners age 70 1/2 or older can direct distributions from an IRA straight to a public charity. The amount counts toward any required minimum distribution but is not included in taxable income. Donor-advised funds and private foundations cannot receive these distributions.
Recent changes to the deduction rules
Federal rules for charitable deductions changed beginning with the 2026 tax year. Taxpayers who itemize can deduct charitable gifts only to the extent the total exceeds a small percentage of adjusted gross income, and for taxpayers in the top bracket the tax benefit of itemized deductions is capped slightly below the top rate. Taxpayers who do not itemize can now deduct a limited amount of cash gifts. These changes make the timing and form of larger gifts more important than before.
The right strategy depends on what you own, your income this year and in future years, and what you want your giving to accomplish. We coordinate charitable strategies with our clients' CPAs and attorneys.
Common questions
What is a donor-advised fund?
A donor-advised fund is a giving account sponsored by a public charity. You contribute cash or appreciated assets, receive the tax deduction in the year of the contribution, and recommend grants to charities over time.
Why give appreciated stock instead of cash?
When you donate publicly traded securities you have held for more than one year directly to a public charity, you can generally deduct their full fair market value, and neither you nor the charity pays capital gains tax on the appreciation.
What is a qualified charitable distribution?
IRA owners age 70 1/2 or older can direct distributions from an IRA straight to a public charity. The amount counts toward any required minimum distribution but is not included in taxable income.
Key figures (as of November 12, 2026)
- Itemized charitable deductions (2026 onward): deductible only above 0.5% of adjusted gross income. For taxpayers in the 37% bracket, the benefit of itemized deductions is capped at 35%.
- Non-itemizers (2026 onward): up to $1,000 of cash gifts ($2,000 for joint filers) to qualifying public charities. Gifts to donor-advised funds do not qualify.
- Annual deduction limits: generally 60% of adjusted gross income for cash and 30% for long-term appreciated securities given to public charities, with a five-year carryforward of any excess.
- Qualified charitable distributions: up to $111,000 per person for 2026, with a one-time election of up to $55,000 to fund a charitable remainder trust or charitable gift annuity. The 2027 limit had not been confirmed at the time of writing.
- Charitable remainder trusts: annual payout of at least 5% and no more than 50%; term of years may not exceed 20; the charity's projected remainder must be at least 10% of the initial value.
References
- Public Law 119-21 (enacted July 4, 2025), charitable contribution provisions effective for tax years beginning in 2026.
- Internal Revenue Code Sections 170, 408(d)(8) and 664; IRS Publication 526; IRS Notice 2025-67 (2026 qualified charitable distribution limits).
- Background reading: Charles Schwab, 'Tax-Smart Strategies for Annual Charitable Giving' (schwab.com); Fidelity Charitable, 'One Big Beautiful Bill: Impact on charitable giving' (fidelitycharitable.org); Kiplinger, '3 Major Changes to the 2026 Charitable Deduction' (kiplinger.com).
Securities offered through Bolton Global Capital, Inc., 579 Main St., Bolton, MA. Member FINRA, SIPC 978-779-5361. Advisory services offered through Bolton Global Asset Management, a SEC registered investment advisor.
This material is provided by NewEra Wealth Advisors for general informational and educational purposes only. It is not intended as, and should not be relied upon as, investment, tax or legal advice, or as a recommendation for any individual. Tax laws and regulations are complex, subject to change, and apply differently depending on individual circumstances. Figures cited are believed to be accurate as of the date shown and may change. Please consult your tax and legal advisors before taking any action. NewEra Wealth Advisors does not provide tax or legal advice.
