Toronto, ON - October 31, 2025 - Cardinal Point Wealth Management has issued an advisory outlining key updates to U.S. charitable giving rules under the Omnibus Budget and Benefits Bill Amendment (OBBBA). Important provisions take effect in 2026, and the notification reveals timely strategies to optimize deductions. That includes five main ways individuals can deduct charitable donations:
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Use a charitable donation deduction in addition to the standard deduction;
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Itemize deductions;
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Leverage qualified charitable distributions from an IRA;
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Contribute to a Donor Advised Fund and
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Fund a Charitable Remainder Trust (CRAT).
Please note that strategies 3-5 typically involve custodians or financial institutions.
What Qualifies as a Deductible Gift?
For a contribution to qualify as tax-deductible, it must be a completed gift to a registered 501(c)(3) charity or another recognized nonprofit. Deductible donations can include cash, appreciated securities, or new and used goods in serviceable condition. However, time volunteered, raffle tickets, the value of goods or services received in an exchange, and crowdfunding gifts made through platforms like GoFundMe are not deductible.
The IRS provides an online search tool to verify whether an organization is eligible for tax-deductible contributions.
For cross-border taxpayers, deductions may also apply to donations made to charities in Canada, Mexico, or Israel, provided those charities are recognized in their home countries and the donor has income sourced from those jurisdictions.
Deduction Limits and New Thresholds
Deduction limits vary depending on the donation type and the receiving organization. Generally, cash donations to public charities are deductible up to 60% of adjusted gross income (AGI), while non-cash donations or contributions to private foundations face lower limits. Excess deductions can be carried forward for up to five years, or 15 years for conservation property.
Beginning with 2026 tax returns, the OBBBA introduces a 0.5% of AGI threshold for itemized charitable deductions. This rule, similar to the 7.5% threshold for medical expenses, may reduce the benefit of smaller donations unless taxpayers plan strategically.
Planning Opportunities for 2025 and Beyond
For those who do not itemize, the OBBBA reinstates an above-the-line charitable deduction starting in 2026. Single filers may deduct up to $1,000, and joint filers up to $2,000 in cash donations beyond the standard deduction.
Taxpayers who itemize should note that the 0.5% threshold begins in 2026 and that the tax benefit for charitable deductions will be capped at 35%, even for those in higher tax brackets. Cardinal Point recommends accelerating charitable giving into 2025 to maximize deductions and avoid the coming limits.
Timing and structure are essential to preserve both generosity and tax efficiency. Cardinal Point Senior Private Wealth Manager Kris Rossignoli emphasizes, “With the OBBBA changes ahead, 2025 represents an opportunity to review giving strategies. Whether through bunching donations into one tax year or using Donor Advised Funds, planning ahead can preserve both generosity and tax efficiency.”
Strategic Giving Options
For retirees over age 70½, Qualified Charitable Distributions (QCDs) from IRAs remain a powerful option. Individuals can direct up to $108,000 (2025) per year from an IRA to a qualified charity. This transfer bypasses taxable income, avoids the AGI threshold, and can reduce Medicare-related costs.
Donor Advised Funds (DAFs) and Charitable Remainder Trusts (CRATs) also offer flexible, long-term options. DAFs allow donors to claim an immediate deduction in the year of contribution while distributing funds to charities over time. CRATs and similar structures, such as Charitable Remainder Unitrusts (CRUTs), can defer capital gains taxes and provide structured income while ensuring a portion of assets benefits a charity at the end of the trust term.
Since each strategy should be tailored to the donor’s broader financial situation, Rossignoli added, “Cross-border taxpayers, in particular, need to coordinate charitable planning across jurisdictions to ensure deductions align with both U.S. and foreign income rules.”
Key Takeaways for Taxpayers
Taxpayers with modest charitable giving may benefit from the reinstated above-the-line deduction beginning in 2026. Those with larger giving goals should consider advancing donations into 2025 before the 0.5% AGI threshold takes effect. Retirees with required minimum distributions can use QCDs to support qualified charities while lowering taxable income.
Cardinal Point stresses that tax-efficient giving requires careful planning, particularly as deduction thresholds evolve. Strategic timing, the right vehicle, and professional guidance can help donors achieve philanthropic goals while optimizing tax outcomes.
About Cardinal Point Wealth Management
Cardinal Point Wealth Management is a cross-border wealth advisory firm specializing in integrated financial, tax, and estate planning solutions for clients with ties to both the United States and Canada. Its team provides expertise in U.S. and Canadian taxation, cross-border investment management, and wealth transfer planning. The firm’s mission is to simplify complex cross-border financial planning challenges and help clients align their wealth strategies with their personal and philanthropic goals.
Media Contact
Company Name: Cardinal Point Wealth Management, ULC
Contact Person: Kris Rossignoli, Senior Private Wealth Manager
Email: Send Email
Country: United States
Website: http://www.cardinalpointwealth.com/
