FREE NEWSLETTER
Go to main Forum page »
Donating to charity used to be simple. Not anymore. I am reaching out for opinions on the most efficient way to donate in 2026. I have identified several ways to donate but can’t decide on the best approach.
The most direct way is to write a check which would be deductible; $2,000 for a married couple or $1,000 for a single taxpayer who takes the standard deduction. Itemizers can deduct up to 35% of AGI (I think).
The next approach is a Qualified Charitable Deduction (QCD) which allows those of us 70 1/2 or older to have our traditional IRA custodian send the donation directly to a charity. This has two advantages; it reduces your minimum distribution and is not taxable if done properly. The limit is $111,000.
Next is donating appreciated securities directly to a charity or to a Donor Advised Fund. The advantage here is that the appreciation is not taxed.
Please comment on my list. I hope I did not miss anything. But if I did, mention it so we can all benefit from the wisdom of the crowd.
I’m old enough to do QCDs and prefer using them to a DAF. I don’t need the anonymity that I gather some DAFs may provide, nor do I want to pay an annual administrative fee to the DAF provider.
Being at a CCRC where a large medical deduction is available every year, I’m already itemizing deductions on my tax return anyway, so making donations via QCDs is the easiest and most tax-efficient for me.
I just read DavidS’s helpful article about DAF. We don’t have one of those, but after reading his article, I am going to research to see if it might be something we would want to do. We are not old enough to take QCD. So, we just write checks. Chris
Thanks, Howard, for raising an important topic.
For itemizers, the new tax rules are more nuanced than presented above. As I understand and beginning this year, itemizers can only deduct charitable donations above a “disallowed” floor, which is 0.5% of one’s AGI. Amounts below this threshhold will no longer be deductible. Also the deductible amount cannot exceed 60% of the AGI (up from 50% previously); donations above that limit may be carried over for up to five years.
The tax benefit for donations for those in the 37% tax bracket would be now as if the donors were in the 35% bracket.
The rules for QCDs are unchanged and not subject to the new limits, making them comparatively more tax efficient for older itemizers.
Howard, thanks for a very helpful post. I like QCDs if you are old enough to use them, because they also keep the income away from state taxes. The new $1k/2k deduction is nice, but I’m not sure if that will be above or below the line, (below the line won’t reduce state tax). Finally, if there is a way to preserve your standard deduction by using the other methods you mention, your tax liability will be lower.
We use the QCD for the bulk of giving. Then for smaller giving like local rescue squad or one off donations, we write a check and will use the deduction now.
Fidelity makes it very easy and efficient. Check is made out to the charity, but mailed to us so we can make sure it gets to the right person.