Starting in 2026, non-itemizing taxpayers can claim, in addition to their standard deduction, up to $1,000 (single) or $2,000 (joint), cash charitable donations. A 0.5% deduction floor will be imposed on itemized charitable contributions, meaning taxpayers can only deduct the portion of their donations that exceeds 0.5% of their Adjusted Gross Income (AGI). These changes may affect your charitable giving—especially when it comes to how much of your annual charitable giving is currently deductible.
For those of you with taxable traditional or rollover IRAs and who have reached the age of 70 ½ and use your IRAs for charitable giving via qualified charitable distributions (QCDs), the aggregated amount of QCDs that can be excluded from gross income in 2026 has been increased to $111,000 per individual. This makes your QCD IRA donations even more valuable to you since IRA QCDs are not subject to the 0.5% of AGI haircut that applies to itemizers. And don’t forget your IRA QCDs count towards your IRA’s taxable required minimum distribution (RMD) that generally start at age 73.
Looking even further ahead, if you leave your IRA to your children when you die, that IRA must be distributed to them within 10 years of them receiving it and those distributions continue to be taxable to them. An alternative option to consider would be to make your faith the beneficiary of your IRA and your family will not incur this tax burden. You can name the parish that helped you grow spiritually or the many ministries available within the Diocese of Helena.
As you are planning your QCDs for the year and your estate plans, please know that the Foundation is happy to help you discern how to use your gifts to sustain and build our beautiful Catholic faith. Because everyone’s tax situation is different, we urge you to discuss these tax code changes with your tax advisor.