(Part 2: Advanced Strategies for Itemizers and Families)

In Part 1, we covered how OBBB helps standard-deduction givers starting in 2026. Now let’s look at families with larger giving goals who itemize. The new rules add two limits you’ll want to understand.

Two new limits for itemizers (starting 2026)

1) The 0.5% “hurdle.”
You have to give more than 0.5% of your AGI before any donation counts as a deduction.

Example (AGI $350,000):
0.5% of $350,000 = $1,750.
If you give $10,000, the first $1,750 doesn’t count, so $8,250 is deductible.
Plain English: the first slice of your giving is invisible on your tax return.

2) A 35% cap on deduction value.
Even if you’re in the 37% bracket, charitable deductions are valued at 35%.

Example (AGI $650,000; gift $100,000):
First apply the 0.5% hurdle: 0.5% of $650,000 = $3,250.
Deductible amount = $100,000 − $3,250 = $96,750.
Tax savings = 35% × $96,750 = $33,862.50, ~$33,800 when rounded to the nearest hundred.
Plain English: same generosity, slightly smaller tax break than before.

Bringing it together with a family example:

Under 2025 rules (through year-end 2025):
The full $100,000 counts. At their top bracket, that’s roughly $37,000 in tax savings.
Under 2026+ rules:
First $3,250 doesn’t count (the 0.5% hurdle). Deductible portion = $96,750.
With the 35% cap, tax savings ≈ $33,862.50 (~$33,800).
Difference vs. 2025: about $3,200–$3,300 less tax savings for the same $100,000 gift.
Math note (for consistency):
Savings ≈ (Gift − 0.5% × AGI) × 35% → (100,000 − 3,250) × 0.35 = 33,862.5.

What to consider next

Timing: Some families may choose to accelerate larger gifts into 2025 while current rules still apply.
Donor-Advised Funds (DAFs): Make a larger contribution in 2025, take the deduction now, then grant to charities over time.
“Bunching” gifts: Instead of giving the same amount every year, group several years into one year to clear the 0.5% hurdle and increase the value of itemizing.
Give assets, not just cash: Appreciated stock or other assets can still deliver strong tax efficiency.
Trust review: For some, trust structure (e.g., non-grantor approaches) can improve how charitable deductions work under the new rules.

Key takeaway: For higher-income families, OBBB adds a small hurdle and trims the top-end benefit. With smart planning, your generosity can remain both deeply impactful and tax-efficient.