Charitable giving has always played an important role in wealth planning, shaping both philanthropic impact and tax outcomes. With recent legislative changes reshaping the landscape, many wealth holders are now navigating unfamiliar territory. As the new rules approach, this moment calls for clarity, careful planning, and a partner who can help chart the best path forward.
What’s Changing
The One Big Beautiful Bill Act, enacted in July 2025, introduces several significant shifts for individuals planning charitable contributions. Beginning January 1, 2026, new rules for itemized deductions take effect:
Permanent repeal of most miscellaneous itemized deductions
This simplifies the deduction environment but also removes certain levers wealth holders may have relied on.
Cap on itemized deduction benefits
For individuals in the top income tax bracket (beginning at $768,700 for married filing jointly in 2026), the maximum benefit from itemized deductions will be capped at 35 percent. This reflects a 2 percent reduction from current levels.
A new 0.5 percent AGI floor
Only contributions exceeding 0.5 percent of adjusted gross income will be deductible. This mirrors other AGI-based limitations and adds a new calculation for donors to consider.
Why 2025 Matters
As these rules loom, 2025 presents a final opportunity to evaluate charitable giving through the lens of the current law. Wealth holders and their advisors are spending this year reassessing the timing and structure of gifts, weighing scenarios such as accelerating contributions, bunching deductions across alternating years, or modeling different giving approaches to understand their outcomes.
At Sorren, this is where our team steps in. These strategies are complex, and the most effective path depends on your goals, your financial picture, and how these upcoming limitations intersect with your overall plan.
Compliance Is Becoming More Complex
Charitable planning is as much about precision as it is about generosity, and the IRS continues to scrutinize large or complex deductions closely. The requirements themselves haven’t changed, but the stakes feel higher under the new rules.
Key areas our clients often need support with include:
Form 8283 and qualified appraisals
Non-cash gifts over relatively modest thresholds require Form 8283 and, in many cases, a qualified appraisal. While marketable securities are treated as cash, digital assets like Bitcoin are not and must be appraised.
Written acknowledgment
For gifts over $250, donors must obtain a contemporaneous written statement from the charity outlining the contribution and whether anything was received in return.
Appraisal timing
Valuations must be tied either to the date of transfer or to a date within the 60 days prior. The appraisal itself can happen afterward, but the valuation date is fixed to this window.
Complex assets
Gifts involving LLC interests, real estate (particularly partial interests), or tangible personal property come with their own tax considerations. Importantly, the appraisal must reflect the specific interest donated rather than a simple pro rata share of the broader asset.
Recent court cases make the consequences clear: missing or incomplete documentation can result in the loss of a deduction, even when intent is not in question.
Trusts and Charitable Giving
Charitable giving through trusts offers additional planning opportunities, but the rules governing these structures differ significantly. Trust deductions are limited to income distributed to charity, not the in-kind value of the asset transferred. The trust document must explicitly name qualifying charities as potential beneficiaries, and AGI limits do not apply in the same way they do for individuals.
When thoughtfully structured, a trust can reduce tax liability at the trust level, offering unique advantages for philanthropic families. Understanding these distinctions is essential, and our team helps clients weigh the possibilities within their broader estate and charitable goals.
Next Steps to Take Now
As year-end approaches and the new rules near implementation, now is the time to start the right conversations. We help our clients:
• Review charitable giving plans for both 2025 and 2026
• Navigate documentation and appraisal requirements
• Understand the impact of the new AGI floor and deduction cap
• Evaluate whether trust structures offer additional charitable flexibility
The next era of charitable giving will reward preparation and precision. For donors looking to maintain their philanthropic impact while navigating added regulatory complexity, partnership matters more than ever. Sorren is here to help you move forward with clarity and confidence as these changes take effect. Contact one of our advisors today for guidance.
