Does bunching gifts still make sense post-OBBB?
May 28, 2026
The One Big Beautiful Bill Act (OBBB) changed many of the tax planning conversations advisors had been having with their clients about charitable giving. Specifically, starting in 2026, OBBB made the following changes related to individual giving:
- It provides taxpayers who don’t itemize the opportunity to deduct cash donations to certain charities, up to a total of $1,000 for single filers and $2,000 for joint filers. (NOTE: This deduction is not available for cash contributions to a donor advised fund.)
- It establishes a floor on charitable deductions for people who itemize, limiting their deductions to the amount of their charitable contributions that exceeds 0.5% of their adjusted gross income.
- It limits the tax benefit of deductions for taxpayers in the top marginal tax bracket of 37% to 35%.
Prior to these changes, bunching charitable contributions into specific years was a tax-smart strategy for many taxpayers. But how does that advice hold up today?
What is bunching?
“Bunching” involves a donor strategically timing their contributions by consolidating them into specific years, with the goal of receiving an itemized deduction that is greater than the standard deduction. In non-bunching years, they may forego making charitable donations or make minimal contributions, opting to use the standard deduction instead.
How does bunching work under the current tax laws?
Consider this example: John and Jane Taxpayer are a 35-year-old married couple who file jointly. Their adjusted gross income is $100,000. They have historically given $8,000 per year to charity and would like to continue doing so. They have asked you what impact, if any, bunching their gifts every two years will have on their ability to receive a tax benefit for these gifts.
First, let’s assume that the $8,000 John and Jane give each year is cash. If John and Jane itemize their deductions, they will only be allowed to deduct $7,500 of their contributions (or $15,500 in the year they bunch their gifts) because of the new rule limiting their deductions to the amount that exceeds 0.5% of their adjusted gross income. They will also forego the additional charitable deduction for non-itemizers.
As you can see in Table 1, in this scenario, bunching gifts actually lowers John and Jane’s deduction over the two years by $1,700. While their deduction in 2026 when itemizing is $300 higher than the standard deduction, they are losing the $2,000 additional deduction they could have taken had they not itemized.
| Table 1 | ||||
| Contributing Annually | Bunching Gifts | |||
| Itemizable Deductions | 2026 | 2027 | 2026 | 2027 |
| Taxes | $10,000 | $10,000 | $10,000 | $10,000 |
| Mortgage Interest | $7,000 | $7,000 | $7,000 | $7,000 |
| Charitable Contributions** | $7,500 | $7,500 | $15,500 | — |
| Total Itemized Deductions Available | $24,500 | $24,500 | $32,500 | $17,000 |
| Standard Deduction | $32,200 | $32,200* | $32,200 | $32,200* |
| Additional Deduction for Cash Gifts by Non-Itemizers | $2,000 | $2,000 | — | $2,000 |
| Total Non-Itemized Charitable Deductions Available | $34,200 | $34,200 | $32,500 | $34,200 |
| DEDUCTION TAKEN | $34,200 | $34,200 | $32,500 | $34,200 |
| TOTAL DEDUCTION AVAILABLE OVER TWO YEARS |
$68,400 | $66,700 | ||
*Assumes the 2026 standard deduction does not change in 2027, and no further changes are made affecting the availability of itemized deductions.
**Equals the amount by which charitable deductions exceed 0.5% of John and Jane’s adjusted gross income ($500).
Now, if instead John and Jane give $8,000 in highly appreciated publicly traded stock each year, the scenario shifts. As mentioned before, if John and Jane itemize, they will only be allowed to deduct $7,500 of their contributions in non-bunching years and $15,500 in bunching years. However, since they made a gift of stock, not cash, they no longer qualify for the $2,000 annual deduction for non-itemizers. In this case, bunching provides them with an additional tax deduction of $300.
| Table 2 | ||||
| Contributing Annually | Bunching Gifts | |||
| Itemizable Deductions | 2026 | 2027 | 2026 | 2027 |
| Taxes | $10,000 | $10,000 | $10,000 | $10,000 |
| Mortgage Interest | $7,000 | $7,000 | $7,000 | $7,000 |
| Charitable Contributions** | $7,500 | $7,500 | $15,500 | — |
| Total Itemized Deductions Available | $24,500 | $24,500 | $32,500 | $17,000 |
| Standard Deduction | $32,200 | $32,200* | $32,200 | $32,200* |
| Additional Deduction for Cash Gifts by Non-Itemizers | — | — | — | — |
| Total Non-Itemized Charitable Deductions Available | $32,200 | $32,200 | $32,200 | $32,200 |
| DEDUCTION TAKEN | $32,200 | $32,200 | $32,500 | $32,200 |
| TOTAL DEDUCTION AVAILABLE OVER TWO YEARS |
$64,400 | $64,700 | ||
*Assumes the 2026 standard deduction does not change in 2027, and no further changes are made affecting the availability of itemized deductions.
**Equals the amount by which charitable deductions exceed 0.5% of John and Jane’s adjusted gross income ($500).
As you can see from the analyses above, the additional deduction for cash gifts by non-itemizers may make taking the standard deduction more valuable to a client in certain instances. However, for those making non-cash charitable gifts, or for those who are making significantly larger charitable gifts than John and Jane, bunching could still provide a larger tax benefit.
How does bunching affect the recipients of charitable gifts?
While bunching may offer tax benefits for a donor, the large change in gift amounts from year to year may create budgeting and revenue projection difficulties for the nonprofit beneficiaries. One way donors can mitigate this is by using a donor advised fund. Donors can contribute their gifts to the fund (either just in bunching years, or consistently each year) and then make consistent annual gifts to the recipients from the fund. These funds can be set up as a donor advised endowment fund or designated endowment fund. (You can find out more about fund options at MCF here.)
If your client is interested in bunching and you have questions about what types of funds may be a good fit for their charitable giving, our Donor Engagement team would be happy to speak with you! Please contact us at 608-232-1763 or email us at legacy@madisongives.org for more information.
