2026 Year-End Charitable Giving & Tax Planning

For nonprofit organizations and synagogues across the country, the last two months of the year tend to be the busiest time of year to receive donations.

Jewish Federations of North America (JFNA) recently shared its annual Year-End Charitable Giving & Tax Planning memo for 2026. The JCF thanks JFNA for the following updates:

Dear Friends,

The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, continues to reshape year-end charitable planning. Several of its charitable giving provisions take effect this year, so the strategies that made sense in 2025 may not be the right ones for 2026.

The changes cut both ways. Donors who itemize face a new floor on charitable deductions, and those in the top bracket face a new cap on their value. At the same time, donors who take the standard deduction can now deduct a portion of their cash gifts for the first time in years. And starting January 1, 2027, a new federal scholarship tax credit will open an important new way to support Jewish day school education.

Below is an overview of what has changed and the strategies worth discussing with your advisors before December 31.

New in 2027: The Federal Scholarship Tax Credit

On October 1, 2026, the Treasury Department and the IRS released temporary and proposed regulations implementing a new federal tax credit, enacted as part of OBBBA, for contributions to Scholarship Granting Organizations (SGOs) that support qualified K-12 students. The credit takes effect for contributions made on or after January 1, 2027.

Contributions made in 2026 do not qualify.

To help our communities take full advantage of this opportunity, Jewish Federations of North America has joined with Prizmah: Center for Jewish Day Schools, the Orthodox Union, and Teach Coalition to launch The Opportunity Fund for Jewish Education, a national SGO that will direct scholarship funds to Jewish day schools across the country. Learn more at jewishopportunity.org.

Key features of the credit:

• Dollar-for-dollar credit. Eligible taxpayers may claim a federal income tax credit of up to $1,700 per year for cash contributions to a qualified SGO.

• Up to $3,400 for married couples. Under the proposed regulations, spouses filing jointly are treated as separate taxpayers. A couple may claim up to $3,400 if each spouse makes his or her own qualified contribution.

• Cash only. Gifts of stock or other property do not qualify.

• Nonrefundable. The credit can reduce your federal income tax, but cannot generate a refund. Unused credit may be carried forward for up to five years.

• No double benefit. You may not also claim a charitable deduction for the portion of a gift that generates the credit.

• Available regardless of where you live. Taxpayers may contribute to an eligible SGO regardless of their state of residence. Whether scholarships are available to students in a particular state depends on that state's decision to participate in the program.

Keep in mind that the regulations are still in proposed form and may change before they are finalized.

Key OBBBA Provisions for 2026

Tax rates made permanent. OBBBA permanently extended the individual income tax brackets (10% to 37%) and the higher standard deduction. For 2026, the standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers. Taxpayers age 65 and older may also claim a new deduction of up to $6,000 per eligible individual through 2028, which phases out at higher incomes.

Higher SALT deduction cap. The cap on deductions for state and local taxes (SALT) is $40,400 ($20,200 for married filing separately) for 2026. The cap begins to phase down when modified adjusted gross income exceeds $505,000, but not below $10,000 ($5,000 for married filing separately).

New floor and cap if itemizing charitable deductions. Beginning in 2026, two new limits apply to donors who itemize:

• The 0.5% floor. Only the portion of your total charitable gifts for the year that exceeds 0.5% of your adjusted gross income (AGI) is deductible.

• The 35% cap. For taxpayers in the 37% bracket, the tax benefit of itemized deductions, including charitable gifts, is limited to roughly 35 cents per dollar.

Although these limits are now in effect, timing gifts across several years may still reduce their impact on your taxes (see "bunching" below).

A new charitable deduction for non-itemizers. Starting in 2026, taxpayers who take the standard deduction may deduct up to $1,000 ($2,000 for married couples filing jointly) of cash gifts to public charities, such as your Federation's annual campaign. Gifts to donor-advised funds (DAFs) do not qualify.

This permanent provision means that, for the first time since 2021, you can receive a tax benefit for charitable giving even if you take the standard deduction.

Year-End Giving Strategies to Consider

Give appreciated assets instead of cash. Donating stock or other assets held for more than one year remains a best practice. You can generally deduct the full fair market value of the asset and avoid any capital gains tax you would owe if you sold it and gave the proceeds. Such gifts to public charities are generally deductible up to 30% of AGI, and the new 0.5% floor and 35% cap apply to them as well.

Use a donor-advised fund. A DAF lets you make a contribution now, receive the deduction this year, and recommend grants to the charities you choose over time. Funding a DAF with appreciated assets is especially effective because you avoid capital gains tax on the appreciation. Federations and Jewish Community Foundations that sponsor DAFs are experienced in accepting publicly traded stock as well as non-cash assets such as life insurance, privately held business interests, real estate, and certain collectibles.

"Bunch" several years of gifts into one. Bunching may still work for some under the new rules although not to the same effect as last year. Because the 0.5% floor applies every year you itemize, concentrating two or more years of giving into a single year means you can absorb the floor once rather than annually. Bunching can also push your itemized deductions above the standard deduction ($32,200 for married couples in 2026). For example, you could make a larger gift to a DAF in the bunching year and, in the years in between, take the standard deduction while making direct cash gifts of up to $2,000 (married filing jointly) that qualify for the new non-itemizer deduction.

Make a Qualified Charitable Distribution (QCD) from your IRA. If you are age 70½ or older, you may transfer up to $111,000 in 2026 directly from your IRA to a public charity, free of income tax. The limit applies per person, so a married couple can give up to $222,000 if each spouse makes QCDs from his or her own IRA. QCDs:

• Benefit donors whether or not they itemize

• Count toward your required minimum distribution (RMD), which generally begins at age 73

• Keep the distribution out of your adjusted gross income, which also lowers the 0.5% floor that applies to your other charitable gifts

• Remove the assets from your taxable estate

QCDs may not be made to donor-advised funds or supporting organizations. Under the SECURE 2.0 Act, you may also make a once-in-a-lifetime QCD of up to $55,000 in 2026 to fund a charitable gift annuity or charitable remainder trust that pays you income for life. That amount counts toward your $111,000 annual limit. Your Federation endowment professionals can tell you more about these options.

Make gifts to family members. The annual gift tax exclusion for 2026 is $19,000 per recipient ($38,00 for married couples). Gifts within this limit do not count against your lifetime gift and estate tax exemption and remove the assets, and their future growth, from your estate. Note that gifts to individuals are not deductible for income tax purposes.

Next Steps

Your Federation or Jewish Community Foundation professionals are glad to discuss these and other charitable giving strategies with you and your advisors.

Thank you for your continued generosity and partnership.

Please note that JFNA and Federations, including the Jewish Community Foundation, Inc. of Southern New Jersey, not provide tax, legal, or financial advice. The information in this letter is general in nature, and figures reflect 2026 amounts. Please consult your own tax advisor about your specific situation.