Tonight Matters: A Last-Day Charitable Giving Opportunity Before 2026
By: Margaux Essick & Moshe Wolcowitz | December 31, 2025
Happy 2026 (almost)! While you’re chilling the champagne, here’s a quick checklist to make sure you aren’t leaving money on the table before the clock strikes midnight.
The 11th Hour: 2025 Year-End Tax Moves
1. The “2026 Charitable Floor” is Coming
Starting tomorrow (Jan 1, 2026), a new 0.5% AGI floor takes effect for charitable deductions.
· The Rule: You’ll only be able to deduct the portion of your donations that exceeds 0.5% of your Adjusted Gross Income.
· The Strategy: If you were planning to give early next year, do it today. Giving today ensures you get the full deduction without the floor eating into your contribution.
· High Earners: For those in the top bracket, the tax benefit of donations will be capped at 35% starting in 2026 (even if your rate is 37%). Lock in that 37% benefit by donating before midnight!
2. Max Your Retirement (Deadlines are TODAY!)
Today is the absolute final day for employee deferrals.
· 2025 Limits: You can put away $23,500 ($31,000 if you’re 50+).
· New for 2025 (Super Catch-up): If you are aged 60–63, you might be eligible for a “super catch-up” of $11,250—check with your provider immediately!
· Employer Side: S-Corp owners, your company can contribute up to 25% of your salary (up to a combined total of $70,000 for 2025). This is a massive business deduction!
3. The S-Corp “Reasonable Salary” Balancing Act
Finding the “Goldilocks” salary is key for S-Corp owners. You want it just right:
· FICA Savings: Every dollar you take as a distribution instead of salary saves you about 15.3% in self-employment taxes.
· QBI Deduction (The 20% Win): The Section 199A deduction allows you to deduct 20% of your business income. However, if your total income is high, your QBI deduction is limited by the W-2 wages you pay yourself.
· The Play: If your income is over the threshold (~$191k single / ~$383k joint), you may actually need to increase your salary today via a year-end bonus to “unlock” a
larger QBI deduction. It sounds counterintuitive to pay more in salary, but the 20% deduction often outweighs the FICA cost!
4. Wages & 2026 Brackets
The top tax bracket is staying at 37% for 2026 (thanks to the OBBB act), but the brackets have been adjusted for inflation. If you’re a high-income earner, a “balanced approach” to your salary helps keep you from creeping into that 37% zone while still maintaining enough “reasonable compensation” to keep the IRS happy.
Please feel free to connect if you need help with tax planning and/or filing your taxes.
Wolcowitz & Associates, CPA PA