By Jared Price, special to the Baptist Message
ALEXANDRIA, La. (LBM) — Louisiana Baptists need to anticipate upcoming tax changes and consider using strategies that will increase the impact of their charitable giving while reducing their overall tax burden.
Current 2025 Rules
For 2025, only taxpayers who itemize deductions on their tax return can benefit from a charitable deduction. Generally, cash gifts to qualified charitable organizations are deductible up to 60% of the taxpayer’s adjusted gross income (AGI) and non-cash gifts (such as real estate or stock) are deductible up to 30% of AGI.
Upcoming 2026 Changes
General thresholds for charitable deductions remain the same in 2026. However, there are some key changes that affect both non-itemizers and itemizers.
Non-Itemizers
In the past, individuals who claimed the standard deduction could not deduct charitable gifts. Beginning in 2026, non-itemizers can claim a charitable deduction of up to $1,000 above the standard deduction ($2,000 for married couples filing jointly). However, some donations are ineligible such as non-cash gifts (e.g. real estate and stocks) and those to donor-advised funds.
Itemizers
New Charitable Deduction “Floor”
Starting in 2026, itemizers can only claim a charitable deduction for the portion of gifts that exceeds 0.5% of AGI. For example, a couple with $200,000 AGI cannot deduct the first $1,000 they donate, but only the qualifying amount above that first $1,000 in charitable giving.
New Charitable Deduction “Cap”
For taxpayers in the highest tax bracket (37% marginal rate), the value of itemized deductions (including charitable deductions) is capped at 35% of the deduction’s value. Previously, each $1 donated would save $0.37 in taxes for those donors in the 37% tax bracket. However, starting in 2026, only $0.35 of tax savings is available for each dollar donated by these high-income donors.
Important Considerations
For high tax bracket donors, it may be wise to consider accelerating charitable gifts in 2025 to avoid the new rules that take effect in 2026.
Bunching Gifts
By “bunching” in 2025 (making multiple years’ worth of charitable gifts in 2025 to exceed the standard deduction threshold, then taking the standard deduction in those other years) high tax bracket donors may receive a greater tax benefit before the new “floor” and “cap” are imposed.
Gifts to Donor Advised Funds
If unsure about which charitable organizations you want to support, consider establishing a donor-advised fund (DAF). For instance, by establishing a DAF with the Louisiana Baptist Foundation, you can make larger gifts now and decide later which churches and other ministries you would like to support.
Non-Cash Gifts
With the markets near record highs, it is also an excellent opportunity for some individuals to consider making a non-cash gift. Donating appreciated assets (stocks, mutual funds, or real estate held at least one year) can avoid capital gains taxes and provide a charitable deduction for the full fair market value of the donated assets. This means you can give more to your church or other ministries while reducing your tax burden.
IRA Distributions
For individuals 70½ or older, a qualified charitable distribution (QCD) of up to $108,000 in 2025 ($111,000 in 2026) can be made to a qualified charitable organization directly from an IRA, and it is not considered taxable income. Additionally, QCDs count toward an IRA’s annual required minimum distribution. Even for itemizers, QCDs avoid the impact of the new charitable deduction floor and cap.
Opportunity for Generosity in 2026
Nearly 90% of taxpayers claim the standard deduction, meaning most received no tax benefit for charitable gifts in past years. With the new rules for 2026 more families can now enjoy tax benefits for giving to their churches or other ministries, and Louisiana Baptists need to know about this strategic opportunity to be generous while reducing their taxes.
Contact the Louisiana Baptist Foundation (318.445.4495, contact@lbfinfo.org) to learn more about charitable donation strategies that will increase the impact of your giving to advance the Kingdom.
