As we approach year-end, now is a fitting time to consider some tax planning opportunities that may help reduce current and future tax liabilities. Given the complexity and ever-changing tax laws, it is important to be up to date on the most recent changes and aware of their impact. Notably, the One Big Beautiful Bill Act (OBBBA) has increased the importance of managing adjusted gross income (AGI), optimizing charitable giving strategies, and leveraging available estate planning techniques. Here are some considerations that may lead to greater tax efficiency:
Managing Adjusted Gross Income (AGI)
Your adjusted gross income serves as the foundation for numerous tax calculations and determines eligibility for various deductions, credits, contribution limits, and income-based phaseouts. As a result, proactive management of AGI can produce significant tax benefits.
Strategies to help reduce AGI may include:
Maintaining a lower AGI may also help mitigate the impact of certain income-based limitations, including:
For high-income taxpayers, careful AGI management can often generate savings beyond the direct deduction itself by preserving eligibility for other favorable tax provisions.
Understanding New Charitable Contribution Rules
Beginning in 2026, new charitable deduction limitations may affect taxpayers who itemize deductions. Under current law, charitable contributions generally are deductible only to the extent total annual contributions exceed 0.5% of adjusted gross income. As a result, smaller annual gifts may generate less tax benefit than prior years.
For taxpayers claiming the standard deduction, a new charitable deduction of up to $1,000 for single filers and $2,000 for married couples filing jointly is available for qualifying cash gifts made directly to public charities. Contributions to donor-advised funds (DAF), private foundations, and non-cash gifts do not qualify for this deduction.
Given the introduction of the AGI threshold, taxpayers may wish to consider "bunching" multiple years of charitable giving into a single tax year. For example, a donor-advised fund allows you to “front-load” multiple years of giving into a single tax year, potentially offsetting a spike in income while still supporting your favorite organizations over time. Consolidating gifts may increase the likelihood that contributions generate a more meaningful tax deduction while potentially maximizing overall tax efficiency. Rockland Trust has partnered with a leading non-profit sponsoring organization to offer in house management of DAFs to our clients.
Tax-Efficient Giving via Qualified Charitable Distributions (QCDs)
For charitably inclined IRA owners, Qualified Charitable Distributions continue to be one of the most powerful tax planning tools available. Individuals age 70½ or older may transfer up to $111,000 directly from an IRA to qualified charitable organizations during 2026. A QCD counts toward satisfying your required minimum distribution (RMD) for the year while being excluded from taxable income.
Potential benefits of QCDs include:
For many retirees, QCDs may provide greater overall tax savings than claiming a charitable deduction on their tax return.
Estate Planning Through Annual Gifting
For families seeking to transfer wealth across generations, a disciplined gifting program can gradually reduce the size of a taxable estate while providing meaningful benefits to children, grandchildren and other beneficiaries. In 2026, individuals may gift up to $19,000 per recipient without using any portion of their lifetime gift and estate tax exemption or triggering gift tax reporting requirements. Married couples may effectively double this amount through gift-splitting strategies. In addition, payments made directly to educational institutions for tuition or directly to medical providers for qualified medical expenses are generally excluded from gift tax rules and do not count toward the annual exclusion amount.
Year-end planning opportunities are often most effective when implemented before tax deadlines become imminent. Coordinating investment, charitable, retirement, and estate planning strategies can help minimize tax liabilities while aligning with broader family wealth objectives. We encourage you to reach out to you Relationship Manager and/or tax professional to discuss how these planning opportunities may apply to your specific circumstances and long-term financial goals.
