Charitable Bunching: How this Tax-Deduction Strategy Works

Generosity is more than a tax strategy. It is one way families steward God’s resources and answer his call to give. Wise stewardship, however, includes wise planning, and one strategy worth considering is charitable tax-deduction bunching. Bunching your charitable contributions can simplify your giving and increase what you are able to send to the causes God has placed on your heart over the course of several years.

How does charitable deduction bunching work?

The purpose of bunching is to itemize your tax deductions in some years and take the standard deduction in other years. In some cases, this can increase your total tax deductions across multiple years and align larger deductions with years of higher tax exposure.

You can bunch deductions by contributing more than one year of your planned charitable donations to a donor advised fund (DAF) in a single year. The contribution may be eligible for a tax deduction in the year you make the donation, subject to adjusted gross income (AGI) percentage limits, current IRS rules, and substantiation requirements—for example, the 60% of AGI limit for cash gifts to qualified public charities is now permanent. For high-net-worth donors, front-loading larger gifts of cash or appreciated assets into a DAF during higher-income years can be an effective way to help manage tax exposure while funding long-term generosity. Through the DAF, you can later recommend grants to nonprofits over time, preserving flexibility for family philanthropy and longer-range planning—and separating the timing of the tax deduction from the timing of charitable grants.

Consider this example:

Without charitable bunching

The Jones family has an AGI of $150,000, gives 10% of their income to nonprofits each year, and has the following simplified, illustrative tax-deductible expenses:

2026: $15,000 (charitable giving) + $15,000 (other Schedule A deductions) = $30,000 total deductions

2027: $15,000 (charitable giving) + $15,000 (other Schedule A deductions) = $30,000 total deductions

In this simplified illustration, it is smarter for them not to itemize in either year because their deductions do not surpass the 2026 standard deduction for those married filing jointly ($32,200). They will take the standard deduction in 2026 and in 2027*, for a total deduction of $64,400* across both years. Because they take the standard deduction in both years, the new 0.5% AGI floor on itemized charitable deductions (see “New rules beginning in 2026” below) does not affect these totals.

With charitable bunching

If the Jones family chooses to bunch their deductions by donating to a DAF:

2026: $30,000 (charitable giving) − $750 (0.5% AGI floor) = $29,250 in deductible charitable gifts + $15,000 (other Schedule A deductions) = $44,250 in deductions

2027: $0 (charitable giving) + $15,000 (other Schedule A deductions) = $15,000 in deductions

Here, they will itemize their 2026 tax deductions and choose to take the standard deduction in 2027, for a total deduction of $76,450* across both years.

Through the DAF, the Jones family can still recommend supporting their favorite nonprofits in 2027 and beyond—which allows them to separate the timing of the tax deduction from the timing of charitable grants.

Who should consider charitable bunching?

Bunching is not right for everyone. Charitable bunching may work for you if:

• Your deductible expenses tend to be just over or just under the standard deduction each year.
• You expect to have a lower income in the future. This may be due to expected retirement, career change, family changes, or other circumstances. Bunching deductions this year can lower your taxable income in a year when you may be subject to a higher tax rate.
• Similarly, you expect to have an unusually high income this year from a large bonus, investment gains, or other sources.
• You expect significant changes in other deductible expenses like medical expenses or state and local taxes.

Regardless of the situation, charitable bunching can help you concentrate tax deductions in certain years—such as high-income years—to minimize taxable income and maximize how generous you can be over time.

New rules beginning in 2026

New for 2026: Charitable deduction floor for itemized filers

Beginning with the 2026 tax year, itemizing taxpayers generally receive a charitable deduction only for the portion of total gifts that exceeds 0.5% of AGI. For example, if a donor has $1,000,000 of AGI, the first $5,000 of charitable giving does not generate a deduction; only gifts above $5,000 are deductible, subject to the applicable AGI percentage limits. For high-net-worth donors, this change nudges giving toward more intentional, meaningful gift levels rather than smaller, scattered contributions. This is one reason bunching can remain so valuable: combining gifts into higher-income years may help donors clear the 0.5% AGI floor more efficiently while aligning larger deductions with years of higher tax exposure.

New for 2026: Universal charitable deduction for non-itemizers

The One Big Beautiful Bill Act (OBBBA) introduced a new above-the-line charitable deduction beginning in 2026 for taxpayers who take the standard deduction. Single filers may deduct up to $1,000 in eligible cash gifts; married couples filing jointly may deduct up to $2,000. This deduction applies to qualified cash gifts to public charities only—it is not available for gifts to DAFs, supporting organizations, or most private non-operating foundations. While this rule will often matter more to donors giving at more modest levels, it may still be useful for high-net-worth households in years when they are not itemizing and want to continue smaller recurring gifts directly to nonprofits.

New for 2026: 35% cap on the tax benefit for high-income donors

For taxpayers in the highest federal bracket, the tax benefit of charitable deductions is effectively capped at 35 cents per dollar donated beginning in 2026, even if the top marginal rate is higher. In practical terms, that modestly reduces the tax savings associated with very large gifts under the new rules, but it does not reduce the charitable impact of those gifts; it simply changes the after-tax cost of larger commitments. Families and business owners giving strategically in high-income years should account for this cap when projecting the tax benefit of a bunching strategy.

Charitable bunching is, in the end, simply a tool—one way to be more intentional with what God has entrusted to your family. What could greater intentionality in your giving make possible for the causes closest to your heart?

Before implementing a tax-deduction bunching strategy, it is important to consider your overall financial situation, potential future changes in tax laws, and the recent changes introduced by the OBBBA—including the new 0.5% AGI floor on charitable deductions, the universal deduction for non-itemizers, and the 35% cap on the tax benefit for high-income donors. These thresholds, caps, and deduction amounts may change over time. The Signatry does not provide tax, legal, or other professional advice. You should consult professional advisors concerning the legal, tax, or financial consequences of your charitable activities.

 

*The IRS has not yet announced the 2027 standard deduction. In this article, we assume that the 2027 standard deduction will remain the same as the 2026 standard deduction.

The examples provided are simplified and illustrative only and are not personalized tax advice. This does not constitute nor does The Signatry provide legal, tax, financial or other professional advice. You should consult professional advisors concerning the legal, tax, or financial consequences of your charitable activities.