Why 2026 is Different: Four Tax-Time Reminders

It’s tax season here in Kitsap County, which usually means a flurry of paperwork, meetings with CPAs, and a deep dive into the numbers from the previous year. But this year feels a little different, doesn’t it? If you’ve been keeping an eye on the news, you know that 2026 marks a significant shift in tax policy. Whether you are a long-time supporter of the Kitsap Community Foundation or you’re just starting to think about how to donate Kitsap-style to make a local impact, these changes matter.

At the Foundation, we believe that philanthropy should be about the joy of giving, not just the complexity of the tax code. However, understanding the "how" and "when" of your giving can significantly amplify the "why." If you’ve already established a fund with us, now is a terrific time to reach out so we can discuss your charitable priorities for 2026 and beyond. If you haven’t yet established a fund, there has never been a better moment to explore how a donor-advised fund can help you navigate this new landscape.

Even if you have a professional preparing your return, it’s helpful to review a few basic rules. Here are four essential tax-time reminders to discuss with your CPA as you plan your 2026 strategy.

1. Navigating the New "Deductible" for Charitable Giving

The most significant change for 2026 involves how itemized deductions are calculated. As in years past, charitable contributions are generally only deductible if you itemize. If your total deductions don't exceed the new, higher standard deduction: which has risen to $16,100 for individuals and $32,200 for married couples: your gifts may not generate an additional tax benefit.

However, 2026 introduces a new threshold for itemizers: charitable deductions are now only allowed to the extent they exceed 0.5% of your Adjusted Gross Income (AGI). Think of this like a "deductible" for your donations. For example, if your AGI is $200,000, the first $1,000 you give to charity won’t be deductible. Only the amounts above that $1,000 level are eligible for a deduction.

The Strategy: Bunching with a Donor Advised Fund This is where a donor-advised fund at Kitsap Community Foundation becomes an incredibly powerful tool. To comfortably clear that 0.5% AGI floor and exceed the standard deduction, many Kitsap families are choosing to "bundle" or "bunch" their contributions. By making a larger contribution to your fund in a single year: say, three years' worth of giving all at once: you can maximize your tax benefits in the current year and then recommend grants from the fund to your favorite local nonprofits over the following seasons. It keeps your tax strategy efficient while keeping your community support consistent.

2. A New Opportunity for Non-Itemizers

We often hear from younger families or those who have recently paid off their mortgages that they no longer itemize because the standard deduction is so high. In the past, this meant their annual giving didn't provide a federal tax break.

Beginning in 2026, that changes. Even if you do not itemize, you may claim an "above-the-line" charitable deduction for cash gifts to qualifying charities. This applies to up to $1,000 for single filers or $2,000 for married couples filing jointly. Because this deduction reduces your income before your AGI is calculated, it provides a meaningful benefit to a much wider range of donors.

It’s important to note that certain types of funds, including donor-advised funds, are not eligible for this specific "above-the-line" deduction. However, this is a great opportunity to encourage young adult children to start their journey to donate to the Kitsap causes they care about. Whether they are supporting local education or environmental efforts, this new rule ensures their generosity is recognized by the IRS.

3. The "Golden Ticket" for Seniors: Qualified Charitable Distributions (QCDs)

If you are age 70 ½ or older, the Qualified Charitable Distribution (QCD) remains one of the most tax-efficient ways to give, and in 2026, its value has only increased. A QCD allows you to direct funds from your IRA directly to certain charitable funds at the Kitsap Community Foundation.

For 2026, the annual limit for QCDs is $111,000 per taxpayer. This is a powerful way to support the community because QCDs are not affected by the new 0.5% AGI floor or the new 35% cap on itemized deductions. It’s a "straight off the top" transfer that never touches your taxable income.

Whereas the new 35% cap may otherwise lessen the value of an itemized deduction, a gift from a QCD sidesteps this cap entirely because the transfer never appears as income or as an itemized deduction at all — making it the most tax-efficient giving tool available to eligible seniors in any income bracket.

While QCDs cannot be directed to a donor-advised fund, they are perfect for supporting:

• Field-of-Interest Funds: Targeting a specific cause like the arts or youth services.

• Designated Funds: Providing ongoing support to a specific nonprofit you love.

• Unrestricted Funds: Allowing KCF to address the most pressing, emerging needs in our county.

If you are reaching the age where Required Minimum Distributions (RMDs) kick in, a QCD can satisfy that requirement while fueling the local causes that make Kitsap home.

4. Documentation and the "One Receipt" Advantage

The IRS hasn't relaxed its documentation rules. Gifts over $250 require a written acknowledgment, and non-cash gifts (like stock or real estate) have even stricter requirements. If you are making multiple gifts to various organizations throughout the year, keeping track of all those letters can be a headache come April.

When you organize your giving through a donor-advised fund at KCF, we simplify the "back office" of your philanthropy. Instead of chasing down a dozen receipts, you receive one single tax receipt from us for your contributions to the fund. Whether you’ve donated cash, appreciated stock, or even closely held business interests, your consolidated recordkeeping happens in one place. Your CPA will thank you!

Speaking of documentation and planning, have you considered your long-term legacy? We’ve partnered with FreeWill to make it easier than ever to protect your family and support the causes you care about. You can create a legal will for free at FreeWill.com/kitsapfoundation and even include a legacy gift to ensure Kitsap thrives for generations to come.

Looking Ahead: Let's Celebrate Together

Tax rules are about the numbers, but philanthropy is about the people. As we navigate these 2026 changes, we want to make sure your giving remains a source of pride and purpose.

Beyond tax season, we have a lot to look forward to! Mark your calendars for Friday, June 5, 2026, for our Kitsap Celebration of Philanthropy gala. It’s an evening dedicated to honoring the philanthropists in our region and seeing the real-world impact of the funds we steward. Seat reservations go on sale soon, and we would love to see you there to celebrate the collective power of our community.

Your Partners in Giving

The charitable tax rules have always required thoughtful planning, but in 2026, that planning is simply more nuanced. We encourage you to forward this summary to your CPA or financial advisor before your next meeting.

At the Kitsap Community Foundation, it is our honor to work alongside your professional advisors to help structure your giving in a way that aligns with both your financial plan and your heart for this community. Whether you are looking to maximize a deduction through a donor-advised fund or explore legacy options via FreeWill, we are here to help.

Reach out to our team anytime. Let's make 2026 your most impactful year yet.