With the passage of the new tax law in July, there are several changes to charitable giving tax deductions that impact tax years 2025 and 2026. Some of these changes have the potential to lead to an increase in contributions to DAFs this year-end.  

Some of these changes include: 

The standard deduction increases to $15,750 (single filers) and $31,500 (married couples filing jointly) starting for tax year 2025.

  • This higher threshold may mean donors will be investing more into their DAFs in 2025 in order to exceed the standard dedication, a tax strategy referred to as “bunching.”
  • This may create targeted DAF ask opportunities in early Q1 of 2026 if DAFs have recently been established or funded. Consider targeted DAF asks early in 2026. 

For tax year 2026, itemizers will only be able to claim charitable contributions that exceed 0.5% of their aggregate gross income (AGI). For example, if someone makes $100,000, they will only be able to deduct donations above $500.

  • This means some financial institutions are recommending donors consolidate multiple years of giving into a DAF this year (2025) to maximize benefits before this rule takes effect.
  • This may create targeted DAF ask opportunities in early Q1 of 2026 if DAFs have recently been established or funded. Again, consider targeted DAF asks early in 2026. 

Also beginning in 2026, the deductibility cap will become 35% from the current 37% for those in the highest tax bracket. This means starting in 2026, total tax savings for the same contribution will be worth less for the highest earners.

  • Larger gifts in 2025 offer a larger tax deduction for some people this year than in future years. 
  • Funding or creating a donor-advised fund in 2025 can help to offset this in 2026.

Beginning in 2026, single filers can deduct up to $1,000 ($2,000 for couples filing jointly) even if they do not itemize. This is an increase from 2025. However, contributions to a donor-advised fund do not qualify for this deduction. Only direct cash donations will qualify. 

The 60% AGI deduction limit on gifts to public nonprofits is now permanent, allowing donors to make and deduct larger gifts and contributions to their DAFs.

In conclusion, high-earning donors may be more likely to contribute to their DAF this year in order to offset changes going into effect next year that will make their charitable giving, including contributions to DAFs, less tax-efficient. While they may not distribute all of that money this year or even next year, it will likely lead to more money sitting in DAFs in the long run. It is important to have a targeted strategy at all giving levels to ensure nonprofits benefit from more of those DAF dollars, especially as DAF giving becomes more common.