Key Tax Considerations for 2026 Charitable Giving
As 2026 unfolds, it’s a great time to review your charitable giving strategies. Recent updates to tax law—and potential changes ahead—may influence how you think about giving in the year to come. Here are a few key highlights to keep in mind:
The Required Minimum Distribution (RMD) Age
The age at which retirees must begin taking taxable withdrawals remains 73, with a scheduled increase to 75 in 2033. However, the age at which an IRA owner may make a tax-free gift from their IRA has not changed—this remains 70½.
Qualified Charitable Distributions (QCDs)
For 2026, the annual limit for QCDs is indexed for inflation (estimated at approximately $110,000 per person, up from $108,000 in 2025).
QCDs allow individuals age 70½ or older to transfer funds directly from their IRA to a qualified charity, avoiding the need to report the distribution as taxable income. This remains one of the most tax-efficient ways to support Seacrest seniors while also satisfying all or part of your annual RMD.
One-Time QCD Option To Fund a Gift that Pays You
If you are age 70½ or older, you may make a one-time election (indexed for inflation; approximately $56,000 in 2026) from your IRA to fund a charitable gift annuity or charitable remainder trust—without being taxed on the distribution.
A charitable gift annuity allows you to make a meaningful gift while receiving fixed payments for life, providing additional income for you or your spouse.
With today’s higher payout rates, this can be an especially attractive strategy to consider.
New IRS Reporting for QCDs
The IRS now includes a designated reporting code (Code Y) on Form 1099-R to identify QCDs. This helps simplify reporting and provides greater clarity for both taxpayers and advisors.
Standard Deduction Considerations
The standard deduction for 2026 is expected to increase slightly for inflation (estimated at approximately $15,000 for single filers and $30,000 for married couples filing jointly).
Because fewer taxpayers itemize, many donors use a strategy called “charitable bunching.” By combining multiple years of giving into one tax year, you may exceed the standard deduction threshold and maximize your tax benefits.
Estate & Gift Tax Exemption – Changes Ahead
The federal estate and gift tax exemption was $13.61 million per person in 2025, but the higher exemption has now sunset at the end of 2025.
Beginning in 2026, the exemption is expected to revert to approximately $6–7 million per person (adjusted for inflation).
This significant change may impact long-term estate planning. Individuals with larger estates may want to revisit their plans and explore charitable strategies that can reduce estate tax exposure while supporting causes they care about.
Step-Up in Basis for Inherited Assets
Heirs who inherit appreciated assets such as real estate or stocks will generally continue to receive a “step-up in basis,” which can reduce capital gains taxes when the asset is sold.
When paired with charitable giving strategies, this can significantly enhance overall tax efficiency for families.
Inherited IRA Rules – The 10-Year Distribution Requirement
Current law (under the SECURE Act) requires most non-spouse beneficiaries—such as adult children or grandchildren—to withdraw the full balance of an inherited IRA within 10 years of the original owner’s death.
- This can result in a higher tax burden, as withdrawals may push heirs into higher tax brackets.
- Spouses continue to have more flexibility, including the ability to roll an inherited IRA into their own.
- For donors who do not need their retirement assets, naming Seacrest Foundation as a beneficiary of an IRA is a highly tax-efficient way to give. Retirement assets left to charity are not subject to income tax, making this one of the most impactful legacy gifts available.
Let’s Talk!
We would be delighted to help you explore how these updates may fit into your giving plans. Please contact Robin Israel at (760) 516-2018 or risrael@seacrestfoundation.org to learn more about making a difference for Seacrest seniors in need.
