The recent tax legislation introduced a new 0.5% AGI floor for charitable contributions when taxpayers itemize deductions. Much like the medical expense threshold, this means smaller donations may no longer generate a deduction. Even more concerning: disallowed amounts do not carry over. Carryovers from prior years remain intact, but any contributions lost to the floor are simply gone.

Planning opportunities:
● Encourage high-income clients to maximize 2025 contributions before the floor applies in 2026.
● Consider bunching contributions or funding donor-advised funds.
● Alert clients in the 37% bracket that reduced itemized deductions compound the impact.

The bottom line: timing matters more than ever. Charitable clients need to know that generosity in 2025 may go further than generosity in 2026.

This takeaway comes out of recent discussions in COCPA's OB3 Individual and Estate Think Tank, where practitioners shared insights on how the new charitable contribution floor will impact planning. Learn more about the OB3 and what the COCPA is doing to support our members who are breaking it down and working through it.