Changes to U.S. tax law could lead to a surge in charitable giving this year. CNBC's Robert Frank joins 'Squawk Box' with the details.

San Francisco

Recent changes to US tax laws are expected to influence charitable giving patterns, particularly among wealthy donors. New provisions will reduce the tax benefits for high-income individuals starting next year, prompting many to accelerate their donations into the current year—a strategy known as 'bunching.'

While this could lead to a surge in charitable contributions this year, experts warn of a possible drop in 2026 when the new rules take effect. A new deduction for non-itemizers aims to broaden the donor base, but economic pressures such as inflation may limit the ability of lower and middle-income Americans to offset reduced giving from the wealthy. The overall impact on future charitable donations remains uncertain.

Tax impact on wealth giving season: Here's what to know

The changes to US tax laws could lead to a surge in charitable giving this year. Robert Frank joins us with the latest installment of Inside Wealth. And Robert, this is the time of year when people start thinking about this. All about giving, and for many people, it's all about giving and taxes. So last year, Americans gave, exactly. Americans gave $390 billion to charity that last year. That was a record. This year will likely be even higher, thanks in part to a tax change. The big beautiful bill included two provisions that reduce the tax benefits for wealthy donors. Those who itemize can only claim deductions above .5% of their AGI. So if you make $300,000, you can't deduct the first $1,500 you give to charity. The law also caps the benefits for those in the top bracket at 35% rather than the current 37%. So if you donate $1,000, you only get a deduction of $350 instead of the current $370. Now, that may not sound like much, but for donors giving away millions or even billions, those two changes are going to be meaningful. That's why the provisions don't take effect until next year, and it is why tax lawyers are advising clients to pull next year's giving into this year. That's known as bunching. That could lead to a big surge in giving this year and a big drop in 2026. Now, for more on how the wealthy are giving and navigating this year's tax season, check out the Inside Wealth newsletter out tomorrow morning at cnbc.com slash Inside Wealth. That's cnbc.com slash Inside Wealth. Robert, I mean, the idea of more getting pulled into this year, great news for this year, but as you point out, it could signal a big drop for 2026. Do you know how charitable organizations are kind of gearing up for that, preparing for that, or any of them thinking we're not gonna spend everything we get this year because we wanna make sure we can continue our programs into the next year if it turns out to have a big impact? I think that no one knows what the impact will be. There is what I call a giving cliff, where you could have a big gain this year and a drop next year. What's offsetting that in part, and what the big unknown is, at the same time that the wealthy, their benefits will be reduced next year, you've got this other provision that allows a $2,000 or $1,000 per person, $2,000 per couple deduction for those who don't itemize that was not there before. And so this is aimed in part at broadening the base of giving, because right now you've got basically the top, those who make more than $30 million, those worth more than $30 million giving 38% of all charities. So it's become very top heavy. So if the rest of Americans end up giving more and offset that reduction, possible reduction next year of giving it to the wealthy, you could have a net plus this year and plus next year. No one knows what those, now given inflation and that so many non-itemizers families to say middle and lower income are so strained right now with inflation, they may not be giving as much as, they may not make up for the losses at the top. So that's the equation that no one really knows for next year.

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