Smart Year-End Charitable Giving: 5 Strategies to Consider Before December 31

As the year comes to a close, many of our clients ask how they can support the causes they care about while making the most of their tax situation. The good news is that a well-planned gift can do both: help a charity you believe in and reduce your taxes, and in some cases even provide you with income for life.

This year, planning matters more than ever. New federal rules that took effect in 2026 change how charitable gifts are deducted, so the strategy that worked for you last year may not be the best one now.

What changed for 2026

• A deduction even if you don't itemize. Starting with 2026 returns, taxpayers who take the standard deduction can deduct up to $1,000 (single) or $2,000 (married filing jointly) in cash gifts to qualified public charities. Gifts to donor-advised funds and private foundations do not qualify.

• A new floor for itemizers. If you itemize, only the portion of your charitable gifts that exceeds 0.5% of your adjusted gross income is deductible. For example, with an AGI of $200,000, the first $1,000 of gifts is not deductible.

• A cap for the top bracket. Taxpayers in the 37% bracket now receive a maximum tax benefit of 35% on itemized deductions, including charitable gifts.

Because of these changes, how you give, not just how much, can make a real difference.

Five year-end giving strategies

1. Qualified Charitable Distributions (QCDs)

Best for: IRA owners age 70½ or older, especially those who do not need their full required minimum distribution (RMD).

A QCD lets you transfer money directly from your IRA to a qualified charity. For 2026, you can give up to $111,000 this way (each spouse can use their own limit). The amount is excluded from your taxable income and can count toward your RMD, which makes QCDs one of the most tax-efficient ways to give, even if you don't itemize.

Important: The funds must go directly from your IRA custodian to the charity, and the transfer must be completed by December 31 to count toward your 2026 RMD. QCDs cannot be made to donor-advised funds or private foundations.

2. Charitable Gift Annuities (CGAs)

Best for: Donors age 65 and older who want a dependable income stream.

With a charitable gift annuity, you make a gift to a charity, and the charity agrees to pay you a fixed amount for the rest of your life. You receive a charitable deduction in the year of the gift for the portion considered a donation. If you fund the annuity with appreciated stock or other assets, part of the capital gain can be spread out over time. Whatever remains after your lifetime supports the charity's mission.

3. Deferred and Flexible Gift Annuities

Best for: Donors in their 50s or early 60s who are still working and planning for retirement.

These work like a regular gift annuity, but your payments begin at a future date that you choose, or within a range of dates for flexibility. Because payments are delayed, the payment rate is generally higher. You receive the charitable deduction now, during your higher-earning years when it may be worth the most.

4. QCD-Funded Gift Annuities

Best for: IRA owners age 70½ or older who want lifetime income from their gift.

The law now allows a one-time QCD of up to $55,000 (2026 limit) from your IRA to fund a charitable gift annuity. The transfer can count toward your RMD and is not taxed when it leaves your IRA. The annuity payments you receive later are taxable as ordinary income, but this option turns retirement savings into lifetime income while supporting a cause you care about.

5. Charitable Remainder Trusts (CRTs)

Best for: Owners of highly appreciated stock, real estate or other assets.

A charitable remainder trust can sell appreciated assets without paying capital gains tax at the time of the sale. The trust pays you (or other beneficiaries) income for life or for a set number of years, and the remainder goes to charity. You receive a partial charitable deduction when the trust is funded. CRTs require an attorney to set up, so start early.

A few year-end reminders

• Give appreciated stock instead of cash. Donating stock you have held for more than a year generally lets you deduct its full market value and avoid the capital gains tax you would pay if you sold it.

• Get it done by December 31. A gift counts for 2026 if the check is mailed, the credit card is charged, or the stock or IRA transfer is completed by the end of the year. Transfers can take several days, so do not wait until the last week.

• Keep your receipts. For any single gift of $250 or more, you need a written acknowledgment from the charity before you file your return.

• Coordinate with your team. Gift annuities and trusts involve the charity, your financial advisor and, in some cases, an attorney. We can work with them to make sure the tax side is handled correctly.

Let's plan your giving together

Every situation is different, and the best strategy depends on your age, income, assets and goals. If you are thinking about a year-end gift, contact A-American Financial Services before December so we can review your options and estimate the tax impact.

Call us at (305) 992-1879 or book an appointment online.

This article is for general information only and is not tax, legal or investment advice. Tax rules and limits change, and their application depends on your individual circumstances. Please consult a qualified professional before making any charitable gift.