Maximizing Your Charitable Deductions Before 2026

Brew

| Sep 2025

MAXIMIZING YOUR CHARITABLE DEDUCTIONS BEFORE 2026

As we approach the last quarter of 2025, charitably inclined individuals that typically itemize deductions on their tax returns should pay extra attention to impending changes under the One Big Beautiful Bill Act (OBBBA). Beginning January 1, 2026, charitable contributions will face two new limitations that make 2025 a uniquely advantageous year to give. While these changes don’t alter the spirit of giving, they may change the economics of when and how you choose to give.

The new .5% floor
Starting in 2026, charitable contributions will only be deductible to the extent they exceed .5% of a taxpayer’s adjusted gross income (AGI). For example, if your AGI is $500,000, the first $2,500 ($500,000 x .005) of contributions would not yield a deduction at all. For consistent annual donors, this change means a portion of your giving will no longer offer any tax benefit beginning in 2026.

The 35% charitable deduction cap
The second change is that the value of charitable contributions will be capped at 35%, even for taxpayers in the 37% marginal tax bracket, meaning high income households will no longer receive the full marginal benefit of their giving. Under 2025 rules, a $100,000 contribution for someone in the 37% bracket reduces tax liability by $37,000. Starting in 2026, that same gift will only reduce tax liability by $35,000.

2025 Considerations
If you anticipate significant charitable giving in future years, for now, 2025 represents your last chance to deduct the full amount of your contributions without the new floor or deduction cap. This may be the ideal year to “accelerate” larger donations or consider front-loading gifts through donor-advised funds or charitable trusts. Speak to your advisor soon to explore strategies tailored to your situation.

2025 vs 2026 Itemized Deduction Taxpayers

Scenario	2025 Rules	2026 Rules	Extra Cost
AGI $500K, Gift $25K	Tax savings: $9,250 (37%) Net cost: $15,750	Tax savings: $7,875 (35%) Net cost: $17,125	+$1,375
AGI $1M Gift $100K	Tax savings: $37,000 (37%) Net cost: $63,000	Tax savings: $35,000 (35%) Net cost: $65,000	+$2,000

MARKET BACKDROP

ASSET CLASS SUMMARY
As of 9/17/2025

Asset Class	1 Month	3 Month	YTD	1 Year	3 Year	5 Year	10 Year
U.S. Stock	+2.75%	+10.90%	+13.04%	+18.60%	+20.48%	+15.52%	+14.10%
Global Ex U.S.	+2.94%	+8.90%	+26.32%	+21.42%	+18.32%	+10.21%	+8.21%
U.S. Bond	+2.02%	+3.54%	+6.49%	+2.60%	+4.15%	-0.43%	+1.92%
Global Bond	+1.67%	+2.52%	+8.65%	+3.01%	+4.57%	-1.53%	+1.22%
U.S. Real Estate	+2.07%	+2.92%	+5.71%	-2.58%	+5.34%	+6.32%	+6.65%

SECTOR SUMMARY
As of 09/17/2025

Cyclical	1 Month	3 Month	YTD	1 Year	3 Year	5 Year	10 Year
Consumer Cyclical	+5.44%	+14.49%	+6.77%	+26.25%	+17.29%	+11.27%	+13.54%
Financials	+3.14%	+8.07%	+12.81%	+21.29%	+20.04%	+19.19%	+13.38%
Materials	+1.03%	+5.59%	+10.37%	-0.19%	+10.23%	+8.68%	+10.18%
Real Estate¹	+1.67%	+1.51%	+4.96%	-3.35%	+5.08%	+6.58%	+7.47%

Sensitive	1 Month	3 Month	YTD	1 Year	3 Year	5 Year	10 Year
Comm. Services	+8.50%	+19.85%	+28.16%	+45.43%	+36.46%	+18.44%	+14.17%
Energy	+5.38%	+2.40%	+7.20%	+5.78%	+8.42%	+26.86%	+7.65%
Industrials	+0.49%	+6.34%	+15.48%	+16.31%	+21.22%	+15.54%	+13.07%
Technology	+1.17%	+14.84%	+17.28%	+27.64%	+34.76%	+22.97%	+24.38%

Defensive	1 Month	3 Month	YTD	1 Year	3 Year	5 Year	10 Year
Consumer Defensive	-0.95%	+0.96%	+5.96%	+2.18%	+9.07%	+9.04%	+9.06%
Health Care	+0.78%	+3.32%	+0.69%	-10.27%	+4.26%	+7.15%	+8.56%
Utilities	-1.43%	+5.72%	+13.05%	+9.88%	+7.62%	+10.68%	+10.65%

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: Consumer Cyclical (S&P 500 Consumer Discretionary (Sector) Total Return), Financials (S&P 500 Financials (Sector) Total Return), Materials (S&P 500 Materials (Sector) Total Return), Real Estate (S&P 500 Real Estate (Sector) Total Return¹), Comm. Services (S&P 500 Communication Services (Sector) Total Return), Energy (S&P 500 Energy (Sector) Total Return), Industrials (S&P 500 Industrials (Sector) Total Return), Technology (S&P 500 Information Technology (Sector) Total Return), Consumer Defensive (S&P 500 Consumer Staples (Sector) Total Return), Health Care (S&P 500 Health Care (Sector) Total Return), Utilities (S&P 500 Utilities (Sector) Total Return).

1) The index Launch Date is Sep 19, 2016. All information for an index prior to its Launch Date is hypothetical back-tested, not actual performance, based on the index methodology in effect on the Launch Date. Back-tested performance reflects application of an index methodology and selection of index constituents with the benefit of hindsight and knowledge of factors that may have positively affected its performance, cannot account for all financial risk that may affect results and may be considered to reflect survivor/look ahead bias. Actual returns may differ significantly from, and be lower than, back-tested returns. Past performance is not an indication or guarantee of future results. This back-tested data may have been created using a “Backward Data Assumption”. For more information on “Backward Data Assumption” and back-testing in general, please see the Performance Disclosure.

This article is for informational purposes only and is not intended as individual investment advice or as a recommendation of any particular security, strategy or investment product. Investing involves risk including the potential loss of principal. SEIA is not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Past performance is not indicative of future results. Signature Investment Advisors, LLC (SIA) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Securities offered through Signature Estate Securities, LLC member FINRA/SIPC. Investment advisory services offered through SIA, LLC, 2121 Avenue of the Stars, Suite 1600, Los Angeles, CA 90067, (310) 712-2323. The information provided in this article is for general informational purposes only and does not constitute professional advice. Individual results may vary, and it is important to consult with a qualified professional before making any financial or legal decisions. For details on the professional designations displayed herein, including descriptions, minimum requirements, and ongoing education requirements, please visit seia.com/disclosures. SIA does not accept time-sensitive, action‐oriented messages or transaction orders, including orders to purchase or sell securities, via electronic mail.

Maximizing Your Charitable Deductions Before 2026

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