Charitable Deductions in 2026: An OBBBA Guide for Complex-Asset & Pre-Liquidity Clients

A client wants to make their largest charitable gift ever following a pending liquidity event. They ask, “Will the deduction work the way it did before?” The honest answer is no. The One Big Beautiful Bill Act reset the math for 2026, and the changes have impacted charitable giving, especially for clients giving complex assets ahead of a liquidity event.

Below are the questions advisors are asking most for their complex-asset and pre-liquidity clients. Use this guide as a reference before your next charitable planning conversation.*

What is the One Big Beautiful Bill Act, and why does it matter for charitable giving?

The One Big Beautiful Bill Act (OBBBA) is the 2025 federal tax law signed on July 4, 2025. It made several provisions from the 2017 Tax Cuts and Jobs Act permanent.  For philanthropy, the charitable provisions apply to tax years beginning after December 31, 2025, so they will first show up on returns for the 2026 tax year.¹

Several points matter for high-net-worth (HNW) and ultra-high-net-worth (UHNW) clients, especially those weighing gifts of appreciated or complex assets. The law makes the 60% of AGI ceiling for cash gifts to public charities permanent, so clients keep room to deduct large cash gifts in high-income years.² It also adds two new limits that work against charitable deductions: a floor that disallows the first slice of giving, and a cap on how much each dollar of deduction is worth for top-bracket filers (more on these below).

The net effect is not a reason to give less. It is a reason to plan the timing, the asset, and the charitable vehicle with extra care, especially when the gift is a concentrated position, private stock, or a business interest.

What do the 2026 OBBBA changes mean for large or complex gifts?

Three things changed for clients who itemize³:

1. A new 0.5% of AGI floor reduces the deductible amount before any of the familiar percentage ceilings apply.
2. A separate cap holds the tax value of itemized deductions to a 35% rate for top-bracket clients, rather than the 37% they are used to seeing.
3. A temporary increase in the state and local tax (SALT) deduction cap, raised from $10,000 to $40,000 for tax years 2025 through 2029, though it scales down for higher-income clients.

For UHNW and pre-liquidity clients, the floor and the cap will move the numbers. The two also compound in the same year, which is easy to overlook.

OBBBA also restored a modest deduction for non-itemizers: clients who take the standard deduction can again deduct a limited amount of cash giving, though gifts to donor-advised funds (DAFs) do not qualify. Since UHNW clients almost always itemize, this rarely applies to them.

What is the new 0.5% AGI floor, and how does it affect high-income clients and appreciated-asset gifts?

The floor disallows the deduction for the first 0.5% of a client’s adjusted gross income in charitable contributions and affects nearly everyone who itemizes. Only giving above that threshold is deductible, and the reduction happens before the traditional 60/50/30/20% AGI ceilings are applied.

The dollar impact scales with income. A client with $2 million in AGI loses the deduction on the first $10,000 of gifts, including gifts of appreciated stock or other assets. A client with $5 million in AGI loses it on the first $25,000. For most $10M-plus clients making a single large gift, the floor is small relative to the size of the gift, but it is a material reduction that recurs every year the client gives.

Why does the order the floor is applied in matter for appreciated-asset gifts?

Because the floor runs in the reverse of the usual AGI-limit order, reducing a client’s least tax-favored gifts first. It starts with the 20% category, then works up through the 30%, 50%, and 60% categories until the full 0.5% of AGI is absorbed.¹ What remains after the floor applies is then measured against the traditional percentage limits.

This detail could easily catch advisors off guard. The 20% category, which includes certain appreciated-property gifts to private foundations, is reduced first, even when a client also made cash gifts sitting in the 60% category. The floor lands on the appreciated asset before it touches cash given to public charities. Model it the other way, and the deduction estimate you hand your client will not hold up at filing.

How does the 35% cap affect clients in the 37% marginal bracket?

The tax benefit of itemized deductions, including charitable gifts, is now capped at a 35% rate rather than 37%³. The reduction equals 2/37 of the lesser of the client’s total itemized deductions or their taxable income (including itemized deductions) above the bracket threshold. This limit targets the high earners who tend to make the largest gifts.

The per-dollar difference looks minor and compounds quickly. On a $100,000 gift, whether it’s cash or a complex asset, a top-bracket client who previously captured $37,000 in benefit now captures $35,000, and in a year where the 0.5% floor applies, the combined benefit is lower. On a $1 million commitment, the gap is $20,000. And this is an additional limit, not a substitute for the floor. A top-bracket client absorbs both the cap and floor at once, so the effective value of charitable giving narrows from both sides.

What happens to deductions that get pushed out by the floor?

It depends, and this is the trap. The amount disallowed by the 0.5% floor carries forward for up to five years only if the gift also exceeds one of the AGI percentage ceilings that year.⁴ When there is a ceiling-based carryover to attach to, the floored amount rides along with it under Code Section 170(d)(1)(C). But when the floor is the only thing limiting the gift, the disallowed amount does not carry forward. It is gone. Two mechanics belong in any multi-year model: carryovers from gifts made before January 1, 2026, are not subject to the new floor when they are used in later years, and current-year gifts are counted ahead of carryovers against the ceilings.

What happens to a charitable deduction in a liquidity-event year?

A liquidity event can quietly turn part of a client’s charitable deduction into a permanent loss. The 0.5% floor scales with AGI, so a spike in income raises the floor in the very year a client is most likely to give. If that year’s gift sits under the percentage ceilings, the floored amount is lost rather than carried forward.⁴

Take a business sale that pushes AGI to $5 million. The floor for that year is $25,000, and a client’s usual gift, if it sits comfortably under the percentage ceilings, can lose that $25,000 outright rather than deferring it. What decides the outcome is the scale of the gift relative to the ceilings, not its size alone. In a liquidity year, how much a client gives and when can matter as much as which asset they use.

Is it better to give appreciated assets before or after a liquidity event?

Usually before, and often well before the sale is final. When a client contributes a long-term appreciated asset directly, rather than selling it and donating the proceeds, they generally avoid capital gains tax on the donated portion and can deduct the asset at fair market value. Sell first, and the client is left donating cash after already realizing and paying tax on the gain.

The 2026 rules widen that gap. Because the 0.5% floor and the 35% cap now shrink the value of the charitable deduction itself,¹ more of the benefit of a pre-sale gift comes from the capital gains the client never pays, which the new deduction limits do not touch. When the deduction is worth less, the tax-free transfer of appreciation matters more.

Timing is the constraint. If the sale is already locked in by a binding agreement, the client can be taxed on the gain even after giving the asset away, which erases the capital-gains advantage. The gift generally needs to be complete before the client is contractually committed. That narrow window, after a sale becomes likely but before it is binding, is where the largest planning gains sit.

Does the non-itemizer deduction change anything for ultra-high-net-worth clients?

For most UHNW clients directly, no. The returned above-the-line deduction lets non-itemizers deduct up to $1,000, or $2,000 for joint filers, on cash gifts, with DAF contributions ineligible.⁵ Clients at the $10M-plus level almost always itemize, so the provision rarely touches them.

It is worth flagging in one situation: a client who alternates between itemizing and taking the standard deduction, or a family member or beneficiary whose income sits near the threshold. In a non-itemizing year, the small deduction is available for direct cash gifts but not for a DAF contribution, which can shift how they route a modest gift.

How should advisors adjust complex-gift planning for 2026?

There are a few moves advisors should consider for complex-gift planning post-OBBBA:

• Timing large gifts in high-income years can help, where the 60% cash ceiling gives room and the fixed-dollar floor is smallest relative to the gift.
• Choosing the asset deliberately may matter more than it used to, since the floor’s ordering rule and the treatment of appreciated property may dictate which contribution type is most efficient.
• Comparing gifts to the AGI ceilings can pay off because a gift large enough to exceed a ceiling lets the floored amount carry forward, while a smaller gift can forfeit it entirely.
• Bunching several years of giving into one year may be another way to clear the floor efficiently.

The pre-liquidity window is where this matters most. A client approaching a business sale, a public offering, or an unusual income spike has a narrow period when contributing appreciated interests before the event can do more than a cash gift after it. The floor and the cap do not close that window. They raise the cost of walking into it unplanned.

These rules do not weaken the case for giving. They reward advisors who run the numbers early and reach the client before filing season does. If you have a client with a concentrated position, a business interest, or a liquidity event on the horizon, let’s discuss the situation and map the gift before the year gets away from you.

*This content is for informational purposes for financial professionals and is not tax or legal advice. Clients should consult their own tax and legal counsel regarding all charitable deductions.

Sources:

1. Greenberg Traurig, “New Limitations on Charitable Deductions Take Effect in 2026.” https://www.gtlaw.com/en/insights/2025/10/new-limitations-on-charitable-deductions-take-effect-in-2026 
2. WilkinGuttenplan, “New Charitable Giving Rules Under the One Big Beautiful Bill Act.” https://www.wgcpas.com/article/new-charitable-giving-rules-under-the-one-big-beautiful-bill-act/
3. Tax Foundation, “The Charitable Deduction in the One Big Beautiful Bill.” https://taxfoundation.org/blog/charitable-deduction-big-beautiful-bill/
4. Geffen Mesher, “OBBBA’s Charitable Deduction Changes: What You Need to Know for 2026 and Beyond.” https://gmco.com/obbbas-charitable-deduction-changes-what-you-need-to-know-for-2026-and-beyond/
5. Lowenstein Sandler, “OBBBA Provisions Impact Charitable Contribution Deductions.” https://www.lowenstein.com/news-insights/publications/client-alerts/obbba-provisions-impact-charitable-contribution-deductions-te