An executive order signed by President Trump will require all payments to and from the IRS to be made electronically beginning on September 30, 2025. The purpose of this change is to improve efficiency, increase security, reduce delays and the risk of fraud.
According to the order, all payments to the IRS, including tax payments, penalties, and fees, must be made electronically. Similarly, any refunds from the IRS will be issued electronically. This mandate applies to all individuals, trusts, businesses, and tax-exempt organizations.
The IRS supports several electronic payment methods:
- IRS Direct Pay
- Electronic Federal Tax Payment System (EFTPS)
- Credit or debit card
- IRS Online Account
- Payment through tax software when filing a tax return
For additional information on electronic payment methods, please visit https://www.irs.gov/payments.
For refunds, taxpayers will need to provide bank account information (account and routing numbers) and select direct deposit when filing their tax returns. The IRS will no longer be issuing paper checks.
Charitable Giving Changes on the Horizon
The “One Big Beautiful Bill Act” (OBBBA), enacted by Congress in July 2025, makes significant changes to charitable contribution deductions starting in 2026. These changes affect both individuals who itemize their deductions and those who take the standard deduction.
- New Floor on Charitable Deductions: Starting in 2026, individuals who itemize their deductions will need the total amount of their charitable contributions to exceed a new floor of 0.5% of their Adjusted Gross Income (AGI) before dollars contributed would qualify for a tax deduction. For example, if your AGI is $200,000, the first $1,000 of charitable contributions would not be deductible. If you donated $2,500, you would be able to deduct $1,500.
- New cap on the value of itemized deductions: Your itemized deductions cannot reduce your tax bill by more than 35% of the amount deducted, even if you are in a higher tax bracket (37%).
- For example, assume a taxpayer’s taxable income as a single filer is $800,000 and they have $50,000 in total itemized deductions (including charitable contributions, taxes, mortgage interest, etc.). Under the current law (before 2026), as a taxpayer in the 37% tax bracket, this individual would realize a tax benefit from their $50,000 in itemized deductions of:
- Tax benefit = $50,000 × 37% = $18,500.
- For example, assume a taxpayer’s taxable income as a single filer is $800,000 and they have $50,000 in total itemized deductions (including charitable contributions, taxes, mortgage interest, etc.). Under the current law (before 2026), as a taxpayer in the 37% tax bracket, this individual would realize a tax benefit from their $50,000 in itemized deductions of:
Under the new law, starting in 2026, there will be a cap on the amount of tax benefit they can receive from itemized deductions, limiting it to 35% of total deductions. The taxpayer can only benefit up to:
- Tax benefit = $50,000 × 35% = $17,500.
The taxpayer would lose $1,000 of the potential tax benefit.
- Above-the-line deduction for non-itemizers: If you take the standard deduction, you can also deduct up to $1,000 (single) or $2,000 (married filing jointly) of charitable contributions. The standard deduction has been permanently increased to $15,750 (single), $23,625 (head of household), and $30,000 (married filing jointly). These figures will be adjusted annually for inflation. Note that the above-the-line charitable deduction is only available for cash donations to public charities. Gifts to donor advised funds (DAFs) are excluded, as well as contributions of property, stocks, or other non-cash assets. This deduction reduces your taxable income but does not reduce your AGI. The 0.5% floor does not apply to above-the-line charitable deductions.
With the upcoming changes to charitable deductions in 2026, now is an ideal time to reassess your charitable giving strategy. One approach is to accelerate your contributions in 2025, taking full advantage of the current tax laws before they change. Another effective strategy is to consider batching multiple years’ worth of charitable donations into a single year, which can help you exceed the new deduction thresholds. Donor-Advised Funds (DAFs) are effective in certain scenarios for this strategy, allowing you to contribute a lump sum and distribute the funds to charities over time. Additionally, if you are over age 70½ and are required to take minimum distributions from retirement accounts, you might want to consider making Qualified Charitable Distributions (QCDs). QCDs are not affected by the new law and allow you to directly contribute to charity from your retirement accounts, effectively lowering your taxable income even if you take the standard deduction.
