By Lesley Roberts, Philanthropic Advisor
For many attorneys, CPAs, and financial advisors, the end of summer signals the beginning of year-end planning.
As clients turn their attention to tax and financial planning, it’s a good time to revisit charitable strategies that could help them meet their 2026 goals.
One strategy worth putting on the table is bunching.
What is bunching?
Rather than making charitable gifts in roughly equal amounts each year, a client may benefit from concentrating two or more years of planned charitable contributions into a single tax year.
The strategy became more widely used following the Tax Cuts and Jobs Act of 2017, which substantially increased the standard deduction. Historical data shows that many taxpayers who previously itemized deductions began taking the standard deduction instead because their charitable gifts and other deductible expenses no longer exceeded the higher threshold.
Tax law changes in 2026 make proactive planning even more important.
The One Big Beautiful Bill Act added a new limitation under Internal Revenue Code Section 170: itemized charitable deductions generally must exceed 0.5% of adjusted gross income before a deduction is available.
Section 68 also effectively limits the tax benefit of itemized deductions for taxpayers in the highest marginal income tax bracket to 35%.
These provisions are sometimes described as the “floor” and “cap.”
How bunching can help
By concentrating charitable gifts into one year, a client may be able to:
- Itemize deductions in the year of the larger contribution.
- Take the standard deduction in subsequent years.
- Potentially increase cumulative tax savings over time.
- Continue supporting favorite charities on a consistent schedule.
A donor advised fund at the Community Foundation can be an effective vehicle for this strategy.
A client can make a larger contribution to a donor advised fund, generally claim the charitable deduction in the year of the contribution under Internal Revenue Code Section 170(a), and then recommend grants to favorite charities over time.
In other words, the tax deduction happens when the contribution is made, while charitable distributions can happen later.
Two more year-end reminders
Consider appreciated securities.
Charitable planning can be especially effective when appreciated securities are involved. Under Internal Revenue Code Section 170(e)(1)(A), a client who contributes long-term appreciated publicly traded securities to a public charity—including a donor advised or other type of fund at the Community Foundation—generally may deduct the property’s fair market value, subject to applicable adjusted gross income limitations, while avoiding recognition of the built-in capital gain that would otherwise result from a sale.
Don’t forget QCDs.
Qualified Charitable Distributions allow IRA owners age 70½ or older to make tax-free charitable gifts of up to the 2026 annual limit of $111,000 directly to eligible charities—even before required minimum distributions begin.
For some clients, QCDs can lower adjusted gross income and potentially reduce taxes on Social Security benefits and Medicare premiums. They may be particularly worth discussing in light of the new charitable deduction limitations.
Start the conversation now
Bunching is just one tool in the charitable planning toolbox. The earlier you raise the conversation, the more time you and your client have to determine whether it fits their philanthropic goals, tax situation, and broader financial plan.
We’re here to help. Reach out to our Philanthropy team anytime to get a jump on year-end charitable planning.