Consider New Year tax laws for 2025 giving
As we look ahead to 2026, there are new federal tax law changes that may impact how much of your MGA Foundation charitable giving will be tax-deductible. If you're planning a significant gift in the near future, you may want to consider making it in 2025 to maximize your tax benefits.
Both of the changes outlined below are effective January 1, 2026, and each introduces new limitations on charitable deductions for taxpayers who itemize.
1. A New 0.5% Reduction Based on Adjusted Gross Income (AGI)
Starting in 2026, all taxpayers who itemize deductions and make charitable donations will be required to reduce their deductible charitable contributions by 0.5% of their adjusted gross income.
Example: If your AGI is $500,000 and you donate $20,000 to charity, you'll need to reduce your deduction by $2,500 (0.5% of $500,000), making only $17,500 deductible.
2. Additional 2% Reduction for Top Tax Bracket Donors
Taxpayers in the highest income bracket (37%) will face an additional limitation: a 2% reduction on total itemized deductions, including charitable donations.
Example: If you’re in the 37% tax bracket and donate $100,000 to charity, you’ll first apply the 0.5% AGI reduction (as above), and then reduce the remaining deductible amount by an additional 2%. This would further lower the deductible portion of your donation by $2,000 — bringing the total deductible amount to $98,000.
3. What This Means for You
While these examples may seem modest, the impact of these reductions can become significant as donation amounts increase. To preserve the full tax benefit of your giving, it may make sense to accelerate planned 2026 contributions to MGA Foundation into 2025 — before the new rules take effect.
Unfortunately, once 2026 begins, there appears to be no way to avoid these limitations on charitable deductions. We encourage you to speak with your tax advisor to evaluate whether giving early could benefit your individual situation.
As always, thank you for your generosity and commitment to the MGA Foundation.