Donating Appreciated Company Stock Before December 31, and the 0.5% Floor That Is New This Year

Donating shares you have held more than a year lets you deduct fair market value without selling, so there is no gain to recognize. But 2026 adds a new 0.5%-of-AGI floor on charitable deductions, and it eats into the appreciated-stock bucket before it touches your cash gifts. December 31 is the hard edge.

Start with what is actually new, because most of what you have read is not written for this year

The One Big Beautiful Bill Act, signed July 4, 2025, added a new subparagraph to the charitable deduction rules at IRC §170(b)(1)(I), titled the 0.5-percent floor. It says a charitable contribution otherwise allowable is allowed only to the extent the total exceeds 0.5 percent of the taxpayer’s contribution base for the year. Contribution base is AGI under §170(b)(1)(H). It is effective for tax years beginning after December 31, 2025.

So it does not touch a 2025 return. It touches this one. The IRS has said the same thing in its own plain-language material on the Working Families Tax Cuts, describing these as provisions that begin January 1, 2026, not applicable to 2025 returns, and telling itemizers they will lose the benefit of the first half percentage point of their charitable contributions.

Two things follow. First, the arithmetic is small in isolation. On a hypothetical $500,000 AGI, the floor is $2,500 of giving that produces no deduction. Second, and this is the part that gets skipped, the floor does not come off the top of your giving in general. It is absorbed in a specific order.

The ordering is written into the same subparagraph that created the floor. Per IRC §170(b)(1)(I), it is absorbed first by 20%-limit contributions, then by 30%-limit capital gain property, then other 30%-limit contributions, then qualified conservation contributions, then 50%-limit contributions, then 60%-limit cash. Donated appreciated stock sits in that second bucket. Cash sits dead last.

Which means if you give both stock and cash this year, the floor is absorbed by the stock gift, not the cash gift. Keep in mind that matters because the two are not deductible on the same terms, and there is a further wrinkle: §170(d)(1)(C) limits carrying forward an amount disallowed by the floor to years in which the percentage limitation is also exceeded. The floor is not simply deferred the way an over-the-limit gift is.

The floor is not the only thing new, and the other one is bigger for some readers

The same law rewrote IRC §68, which had been dormant since 2018. In its current form it reduces itemized deductions by 2/37 of the lesser of those deductions or the amount by which taxable income exceeds the dollar figure at which the 37 percent bracket begins. The practical effect is to cap the value of each deducted dollar at roughly 35 cents once income runs into the top bracket. Like the floor, it applies to tax years beginning after December 31, 2025.

It does not change what is deductible. It changes what the deduction is worth, which for a large gift is the number that actually matters. At the $500,000 AGI assumed above it would not reach you; well above that it does. Where your taxable income lands against the 37 percent threshold is a question for your CPA, and it belongs in the same conversation as the floor rather than a separate one.

The mechanic underneath has not changed

The reason anyone does this in the first place is unchanged. From IRS Publication 526 (2025), Charitable Contributions, under Giving Property That Has Increased in Value: “When figuring your deduction for a contribution of capital gain property, you can generally use the FMV of the property.”

Pub 526 (2025) defines capital gain property in the same section as property that would have produced long-term capital gain had you sold it at FMV on the contribution date, and it says capital assets held more than one year qualify.

You do not sell, so there is no realization event and no gain to recognize. IRC §170(e)(1)(A) reduces the deduction only by gain that would not have been long-term capital gain, so long-term appreciation is not subtracted out. Deduction at FMV, no sale, no recognized gain. That is the whole move.

For a reader whose net worth has quietly become one ticker, that is a second thing it does. Trimming a concentrated position normally costs you tax to do the trimming, which is exactly the reason concentrated positions stay concentrated. Donating shares you were going to replace with a charitable gift anyway removes some of that position without the sale. It is not a substitute for a full diversification plan, and it only works to the extent you were giving to begin with, but it addresses two problems with one transfer. We walk through the broader version of that tradeoff in RSU Vesting: To Hold or To Fold and in the San Diego HENRY Strategy.

Twelve months is the line, and vest dates cross it later than people assume

Pub 526 (2025), under Ordinary Income Property, treats a share held one year or less as ordinary income property, and for ordinary income property the deduction is FMV minus the amount that would have been ordinary income or short-term capital gain on a sale. In practice that limits you to your basis.

The IRS example in that section uses stock held five months with an FMV of $1,000 and a basis of $800. Because the $200 of appreciation would be short-term gain, the deduction is $800.

For RSUs the holding period starts at vest, not at grant. Shares that vested in March 2026 are short-term through March 2027. Donating those gets you basis, which for RSUs is usually the value already taxed as ordinary income at vest, so the gift produces very little deduction relative to what it costs you. The lot selection is the whole ballgame here, and it is worth confirming vest-by-vest with your CPA rather than donating whatever the platform defaults to.

Same $100,000 gift, three ways

The table below is a hypothetical using assumed numbers: 1,000 shares, $100 per share FMV, $20,000 total cost basis, donor AGI assumed at $500,000. Not a projection and not a client result. The rules in it come from IRS Publication 526 (2025) under Giving Property That Has Increased in Value and Limits on Deductions, from IRC §170(b)(1)(C) and §170(b)(1)(I), and from the Instructions for Form 8283 (Rev. December 2025).

The 30% limit, and the election most people never hear about

Pub 526 (2025), under Limits on Deductions, caps deductible capital gain property given to public charities at 30% of AGI, against 60% for cash to the same organizations. Pub 526 also notes that the 60% limit does not apply to noncash contributions, which is the sentence that trips people up when they assume one number covers everything.

Anything over the limit is not lost. IRC §170(b)(1)(C)(ii) carries the excess into each of the five succeeding taxable years in order of time.

There is also an election. IRC §170(b)(1)(C)(iii), mirrored in Pub 526 (2025) under Limits on Deductions at “Election to apply the 50% limit,” lets you take the higher percentage limit instead by reducing FMV down to basis. On a highly appreciated position that is usually a bad trade, because you surrender the appreciation to buy headroom. On a lot with modest appreciation and a very large gift relative to AGI, it can go the other way. It is a real fork, and it is one to run with your CPA on your actual numbers rather than from a rule of thumb.

Paperwork, where publicly traded and privately held part ways

Noncash gifts over $5,000 generally require Section B of Form 8283 and a written qualified appraisal. The Instructions for Form 8283 (Rev. December 2025) carve out an exception in Section A for securities listed on an exchange with daily published quotations, and for securities regularly traded in national or regional over-the-counter markets with published quotations, even when the claimed value exceeds $5,000 per item.

So listed company stock needs no appraisal, whatever the size of the gift. Stock in a company that is not publicly traded gets no such exception and needs a qualified appraisal above $5,000. If your equity is pre-IPO or in a closely held business, that appraisal is a scheduling item, not a formality, and it is the piece most likely to run past December 31.

On the donor-advised fund side, Pub 526 (2025), under Contributions to Donor-Advised Funds, denies the deduction if you do not have a contemporaneous written acknowledgment from the sponsoring organization stating it has exclusive legal control over the contributed assets. It also denies the deduction if the sponsor is a war veterans’ organization, a fraternal society, or a nonprofit cemetery company. Confirm the acknowledgment language with the sponsor when the transfer is made, not in April.

Lead time, and why the calendar is the real constraint

The IRS rule on timing is simple. Contributions must actually be paid in cash or other property before the close of your tax year to be deductible, whether you use the cash or accrual method. Paid, not initiated.

An in-kind stock transfer is not a same-day event. Opening a donor-advised fund account, getting transfer instructions to the right desk at your custodian, and having the shares actually settle into the receiving account runs weeks in a normal month. December is not a normal month. Blackbaud Institute’s 2025 Trends in Giving data spotlight, announced March 18, 2026, reported that more than 36% of all charitable revenue was raised in Q4, with December alone accounting for roughly 18% of annual giving, despite a cooling macro environment. That comes from Blackbaud’s proprietary dataset covering 7,500-plus nonprofits and more than $66 billion in fundraising revenue, weighted to IRS and Giving USA sector data. Everyone is standing in the same line.

The tension this is actually aimed at

Picture a hypothetical San Diego professional holding roughly $600,000 in highly appreciated RSUs from her employer, about 30% of her total assets. Figures assumed for illustration, not a client and not a projection. She wants the money working somewhere else, and she is not confused about the concentration risk.

What holds someone in that position in place is the tax cost of unwinding a large appreciated position. Not conviction about the stock. The tax drag on getting out.

That is the exact spot where a charitable gift of shares is worth pricing out, because it addresses the concentration and the deduction in one transfer instead of two decisions. Whether it is the right lever depends on facts a blog post does not have, and it is a decision for the person and their CPA. The point is the shape of the problem, which is common in this lane and rarely gets named out loud.

Before the conversation with your CPA

1. Pull the lot-level detail on every holding you are considering, with acquisition or vest dates. Confirm with your CPA which lots are past 12 months.
2. Evaluate your expected 2026 AGI, because it sets both the 30% ceiling and the 0.5% floor, and your expected taxable income, because that is what the §68 limitation measures against.
3. If you plan to give both stock and cash this year, evaluate with your CPA how the ordering rule allocates the floor across the two.
4. Confirm whether the shares are publicly traded or not, because that determines whether a qualified appraisal is in the timeline.
5. Confirm the donor-advised fund sponsor’s written acknowledgment language before the transfer, with your CPA or attorney.
6. Work backward from December 31 on settlement, not from the date you start the paperwork.

None of that produces a promised outcome. Your bracket, your AGI, your basis and your other giving decide what this is worth, and for some readers the answer is that it is not worth doing this year at all. How a charitable gift sequences against the rest of a year-end plan is covered on the tax efficiency and wealth coordination page.

If you are sitting on concentrated shares and a charitable intent that has not been organized around the 2026 rules, you can put a complimentary review on the calendar. Fee is discussed during that review.

One question worth answering in a line: are the shares you would give past the 12-month mark, or not yet?

FAQ

Does the 0.5% floor apply to my 2025 return?

No. IRC §170(b)(1)(I) is effective for tax years beginning after December 31, 2025, and the IRS has stated these provisions begin January 1, 2026 and are not applicable to 2025 returns. It applies to the return you file for 2026.

My RSUs vested six months ago. Can I still donate them?

You can donate them, but the deduction is different. Pub 526 (2025) treats shares held one year or less as ordinary income property, and the deduction is FMV reduced by the short-term gain, which generally limits you to basis. The IRS example uses stock held five months with $1,000 FMV and $800 basis, deductible at $800.

Do I need a qualified appraisal to donate company stock?

It depends on whether the stock is publicly traded. The Instructions for Form 8283 (Rev. December 2025) exempt securities listed on an exchange with daily published quotations from the appraisal requirement even above $5,000. Stock that is not publicly traded gets no exemption and needs a qualified appraisal above $5,000.

What happens if my gift is larger than 30% of my AGI?

The excess is not lost. IRC §170(b)(1)(C)(ii) carries it forward into each of the five succeeding taxable years in order of time. An amount disallowed by the 0.5% floor is treated differently under §170(d)(1)(C), which restricts the carryforward to years in which the percentage limitation is also exceeded.

Is cash or stock better under the new floor?

They are not interchangeable. Cash to public charities is subject to a 60% of AGI limit and stock is subject to 30%, per Pub 526 (2025), but the 0.5% floor is absorbed by the capital gain property bucket before it reaches cash. Which one is better depends on your AGI, your basis and how much you are giving, so it is a calculation with your CPA rather than a general rule.

Is there anything else new for 2026 besides the floor?

Yes. The same law rewrote IRC §68, which reduces itemized deductions by 2/37 of the amount by which taxable income exceeds the start of the 37 percent bracket, capping the value of each deducted dollar at roughly 35 cents inside that bracket. It also applies to tax years beginning after December 31, 2025. It changes what a deduction is worth rather than whether you get one.

How late can I start and still have it count for 2026?

The IRS requires the contribution to be actually paid in cash or other property before the close of your tax year. For an in-kind stock transfer that means settled, not submitted. Opening a donor-advised fund and moving shares typically runs weeks, and December alone accounts for roughly 18% of annual giving per Blackbaud Institute’s 2025 Trends in Giving spotlight, so the queue is long. The practical deadline sits well before December 31.

Sources: IRS Publication 526 (2025), Charitable Contributions, under Contributions to Donor-Advised Funds, Giving Property That Has Increased in Value, and Limits on Deductions. IRS, Charitable contribution deductions, last reviewed June 28, 2026, for the timing rule only. IRS, Understanding the Working Families Tax Cuts: Individual Tax Provisions, video text script. Internal Revenue Code §170, including §170(b)(1)(C), §170(b)(1)(I), §170(d)(1) and §170(e)(1)(A), and §68 as amended. Instructions for Form 8283 (Rev. December 2025). Blackbaud Institute, 2025 Trends in Giving data spotlight, announced March 18, 2026, based on a proprietary dataset of 7,500-plus nonprofits and more than $66 billion in fundraising revenue, weighted to IRS and Giving USA sector data. The 1,000 shares, $100 FMV, $20,000 basis, $500,000 AGI and $600,000 RSU figures are hypothetical illustrations using assumed values, not projections and not client results.