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It’s Giving Tuesday, and it comes at a pivotal moment for anyone thinking about year-end tax planning. Big changes to charitable giving rules are coming in 2026, and many donors are trying to figure out the smartest moves to make before the deadline. For more, we’re bringing in Nick Cherney, global head of innovation at Janice Henderson Investors. Nick, it is good to see you. So there are these new rules coming, Nick, for charitable giving. Maybe start there, Nick. What are these new rules? What do people need to
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know?Yeah, I mean, obviously tax rules can get very complicated, very fast, but at a, at a high level, the kind of the most significant change is really that for tax filers who are used to filing for deductions, there’s a new change that limits the amount of deductions that you can take for charitable giving.Um, and so you’re only able to deduct giving that exceeds 1.5 or 1% of your adjusted gross income, uh, starting in 2026. So, uh, you know, for somebody making $50,000 a year, you know, that means the 1st $250 of their charitable giving is no longer deductible.you know, if you make $100,000 a year, it’s the 1st $500. And so, you know, there’s strategies I think that people can can employ to try to think ahead and plan for those changes as they come starting next year.
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And what are those strategies, Nick? What would you highlight?
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Yeah, I mean, I think probably the most obvious thing is to think about how you can sort of front load or bunch your giving. So there’s there’s a strategy that’s been pretty well known to kind of high net worth and ultra high net worth investors for a long time, which is this idea of a donor advised fund.And what that lets you do is make a donation today that is 100% deductible, um, and then you can invest those funds and donate them over time. And so people have done that for a long time because it allows you to um have a bunch of benefits, right? One of which is obviously, um, getting your, your tax deduction now for future giving. There’s some, some sort of practical things as well, right? Around making it a little bit easier to keep track of your giving, etc. um, but.This year in particular, I think it’s maybe attractive even to donors at the lower end of the spectrum if they’re, if they’re used to making deductions in their income tax because the availability of those deductions is going to go down. And so again, even for somebody who makes $50,000 a year and maybe is donating $250 there’s no ability to deduct that at all starting next year. And if you were to donate, say $750 this year.Into a donor advised fund, you could take that full deduction and then make your $250 donation each year for the next 3 years, and you would have already gotten the deduction. So I think, uh, this idea of bunching is one that has been used by kind of larger donors for a long time. And, uh, with these changes, I think it’s, uh, potentially, uh, important for, for donors really of all sizes to, to maximize the, the, the impact of, of their donations and, and get the deduction this year.