Tax Planning for High Income Earners: Give Cash or Give Stock in 2026?

Most years, you probably give to charity the same way. You settle on an amount and write a check in December. It's simple, and until now the tax side mostly took care of itself.

For 2026, that quiet arrangement changed. The same check earns you a smaller tax break than it would have last year, and you likely won't notice until your return is done. Good tax planning for high income earners used to treat charitable giving as a solved problem. Two new rules turned it back into a real decision, and the good news is the fix is simple once you can see it.

How should tax planning for high income earners change for 2026?

Two rules changed, both from the 2025 tax law, both starting with the 2026 tax year. Here they are in plain terms.

First, a new floor. If you itemize (meaning you add up deductions like mortgage interest, state taxes, and charitable gifts instead of taking the flat standard deduction), you can now only count charitable gifts above 0.5% of your income for 2026. Put simply, the first half a percent of your income that you give no longer earns a deduction. On $500,000 of income, the first $2,500 you donate does not count, and only what you give above that does.

Second, a new cap at the very top. If your income reaches the highest bracket (above $768,700 for a married couple in 2026), the tax benefit of your deductions, charitable gifts included, is limited to 35 cents per dollar instead of 37.

Neither rule stops you from giving a dime. What they both do is make giving cash a little more expensive, right at the income levels we work with every day.

Does the new floor really cost a high earner much?

On its own, not really. If you give well above that half-percent line, the floor just trims a fixed amount off the top and leaves the rest deductible. The person who feels it most is someone giving smaller, steady amounts that now sit right around the line.

Where it matters is in what it quietly rewards. Because only giving above the line counts, spreading the same total across several years wastes a little deduction every year. Grouping it into fewer, bigger years, so you clear the line by a lot when you do give, wastes it only once.

The bigger lever: what you give, not how much

Here is the part most people writing checks have backwards, and it is where the real money is. The strongest move for 2026 usually is not giving less. It is giving something other than cash.

When you donate stock that is worth more than you paid and that you have held longer than a year, two good things happen at once. You deduct the full value of the shares today, exactly as if you had given that much cash. And you skip the capital gains tax you would owe if you sold the shares yourself. (Capital gains tax is the tax on an investment's growth when you cash it in. For a high earner it can reach about 23.8% of the gain.)

That second part is the whole point. The benefit of giving appreciated stock is built in before the deduction ever comes up, in a tax bill you simply never trigger. The new floor and cap reach your deduction. They cannot reach a gain you never took.

A quick example

Here's how it plays out in real life, with round numbers to keep the math easy to follow. Picture a married couple earning $500,000 who want to give $30,000 in 2026. They also own stock they bought years ago for $6,000 that is now worth $30,000.

Write the $30,000 check: they deduct $30,000 minus the $2,500 floor, so $27,500. The stock stays in their account, still taxable on its $24,000 of growth whenever they sell.

Give $30,000 of the stock instead: they still deduct the same $27,500. But now that $24,000 of growth disappears for tax purposes. At about 23.8%, that is roughly $5,700 in capital gains tax they never pay. Same gift to the charity, same deduction, and one path quietly keeps about $5,700 more. If they still want to own the stock, they can buy it right back with the cash they would have donated, which resets their starting point higher for next time.

When this isn't the right move

A few honest limits, because the stock move is not always the answer.

The shares have to be long-term, held more than a year. Owned a year or less, the deduction shrinks to what you paid rather than what they are worth, and the advantage is gone.

There is also a ceiling. Gifts of appreciated stock are deductible up to 30% of your income in a year, against 60% for cash, so a very large gift relative to your income can bump into it. Nothing is lost if it does. You carry the extra forward for up to five years.

And if a stock is worth less than you paid, do not donate it. Sell it first so you can claim the loss on your taxes, then give the cash. Donating a loser just hands over the shares and wastes a deduction you could have kept.

What to do before year end

Two quick things. Look at what you plan to give in 2026, then look at your investment account for something you have held more than a year that has grown a lot. If you have both, the gift should almost always come from that stock, not your checkbook.

And if you give every year, ask whether two or three years of giving could go into one. That grouping is called bunching, and you can route it through a donor advised fund, a charitable account you fund now and give out of over time, so the tax timing and the actual giving stay separate decisions. That is what good tax planning for high income earners really comes down to here: not how big the check is, but which account it comes from.

We are currently offering our Tax Savings Blueprint, a forward-looking planning service for the 2026 tax year. We review your returns and current-year documents, project where your 2026 return is heading, and walk you through it on a call, so you leave with a clear picture of your tax situation, the strategies available to you, and a set of actions to put in motion. Schedule a free intro call to learn more.

This is for general educational purposes and isn't personalized tax advice. Every situation is different, talk with your CPA before acting on any strategy discussed here.