The rules for deducting charitable gifts changed at the start of 2026, and the headlines have mostly framed it as bad news for donors. There is a new floor before you can deduct anything. There is a haircut on the benefit for top earners. For a lot of people, giving got a little less tax friendly.
But if you are selling a business, the picture looks different. A sale year is unusual, and several of the new rules either do not touch the part that matters to you or actually work in your favor. Here is what changed and why a business owner should read it as opportunity rather than warning.
The Three Changes Worth Knowing
The One Big Beautiful Bill Act rewrote a few things that took effect on January 1, 2026. Three of them matter for charitable giving.
First, there is now a floor for people who itemize. You can only deduct the portion of your charitable giving that exceeds half a percent of your adjusted gross income. If your AGI is a million dollars, the first five thousand dollars of giving is not deductible, and everything above it is. For ordinary annual giving this stings. For a single large gift it barely registers, because the floor is small next to the gift.
Second, the value of itemized deductions is capped at 35% for people in the top 37% bracket. In plain terms, a dollar of deduction that used to save you 37 cents now saves you 35. It is a real reduction, but a modest one.
Third, people who do not itemize finally get a small deduction again, up to a thousand dollars for single filers and two thousand for joint filers, but only for cash gifts directly to public charities. This one does not apply to gifts to donor advised funds or private foundations, so it rarely matters for a business owner planning a major gift.
Why None of This Hurts the Core Strategy
The whole reason to give appreciated stock before a sale is to avoid the capital gains tax on the appreciation. That benefit is untouched by the 2026 changes.
Think about where the value comes from in a pre-sale gift. The biggest piece is not the income tax deduction. It is the capital gains tax you never pay because the charity, not you, owns the shares when they sell. On a low basis company that has grown for decades, that avoided gain can dwarf the value of the deduction itself.
The new 35% cap applies to the deduction. It does not apply to the capital gains you sidestep by giving the asset away. So the engine of the strategy keeps running at full power. The changes nick the smaller benefit and leave the larger one alone.
This is exactly why advisors now tell high income clients to lead with gifts of appreciated assets rather than cash. Cash giving took the bigger hit from the new rules. Giving stock, real estate, or other long held appreciated property did not.
A Sale Year Is the Best Year to Give
Here is the part that turns a defensive story into an offensive one.
The percentage of AGI limits cap how much you can deduct in a single year. A sale floods your return with income, which lifts those ceilings. Suddenly there is room to absorb a much larger deductible gift than you could use in a normal year. The same windfall that creates a big tax bill also creates the capacity to offset it with giving.
Pair that with the floor. The new half percent floor is a fixed cost you pay once per year you give. If you are going to give anyway, concentrating a large gift into your sale year clears that floor easily and gets nearly all of the gift deducted. Spreading small gifts across many quiet years means hitting the floor over and over and losing a little each time.
So the math lines up neatly. Give in the year of the sale, when your income is high, your deduction ceiling is high, and your one time floor is trivial against the size of the gift. For most owners, the sale year will be the single most tax efficient year of their lives to make a major charitable gift.
How This Shapes Your Planning
A few practical points follow from all of this.
- Favor appreciated assets over cash. The capital gains avoidance is the prize, and it survived the 2026 changes intact. Giving the stock itself beats selling and donating the cash.
- Time the gift to the sale year. The high income year gives you the deduction room and minimizes the drag from the new floor.
- Do not let the headlines scare you off. The coverage aimed at everyday donors does not describe the situation of someone selling a business. Your facts are different.
- Mind the timing rules. None of this works unless the gift is completed before the sale is locked in. That requirement did not change and remains the thing most likely to trip up a late mover.
- Coordinate the whole picture. In a sale year you are juggling the capital gains on the part you keep, the deduction limits, the floor, and the choice of charitable vehicle. These interact, and getting the sequence right is worth a conversation with people who do this often.
The Bottom Line
The 2026 rules made routine cash giving a little less rewarding and added a small hurdle for everyone who itemizes. If that were the whole story, a business owner might reasonably feel discouraged.
But it is not the whole story. The core move behind pre-sale charitable planning, giving away appreciated stock to escape the capital gains tax, came through the changes unharmed. And the structure of the new rules quietly rewards exactly the kind of large, concentrated gift that a sale year invites. The owner who understands this does not give less in 2026. They give smartly, in the right year, with the right asset, and they come out ahead of where the headlines would have them believe.
If a sale is on your horizon, the new landscape is a reason to plan more carefully, not a reason to hold back. The earlier you map it out, the more of these advantages you can actually capture.
