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Merck Employees: Should You Delay Charitable Giving Until 2026?

Healthcare Provider Update: Healthcare Provider for Merck Merck & Co., Inc., commonly known as Merck, is a global leader in the healthcare sector, renowned for its innovative pharmaceuticals, vaccines, and biologic therapies. As a prominent healthcare provider, Merck delivers a wide array of health solutions targeting various health conditions, particularly in areas such as immunology, oncology, and infectious diseases. Potential Healthcare Cost Increases in 2026 In 2026, healthcare costs are projected to rise significantly, primarily driven by the anticipated expiration of enhanced federal premium subsidies associated with the Affordable Care Act (ACA) and growing medical expenses. Faced with an average premium increase of 18%, healthcare consumers may experience out-of-pocket costs climbing by over 75%. This situation is exacerbated by surging medical care prices, as hospitals and providers seek to balance inflationary pressures while maintaining profitability. As a result, many individuals may find themselves priced out of adequate health coverage, prompting essential discussions on the need for policy interventions. Click here to learn more

'For Merck employees, thoughtful timing of 2025–2026 charitable gifts can influence your long-term retirement strategy, making it important to consider your broader financial plan when making these choices.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'Merck employees can benefit from working with tax and legal professionals to revisit their 2025–2026 charitable giving timelines, as aligning these decisions with your broader financial picture can help you stay organized and make informed choices.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

How the 2025–2026 rule changes may affect the tax benefits of your charitable gifts.
The different charitable deduction rules for standard deduction filers versus itemizers.
Strategies for timing your giving as a long-time Merck employee or retiree.

2025–2026 Charitable Giving: How New Regulations May Affect Your Tax Plan

By Wealth Enhancement's Kevin Land, CFP® and Wesley Boudreaux

Giving to charities at the end of the year has long been a December custom for many households, including long-time employees and retirees from Merck. However, the One Big Beautiful Bill Act has changed how charitable deductions work, with substantial updates taking effect in 2025 and 2026. As a result, the familiar “give by December 31” rule may not be the most tax-efficient approach anymore.

The law essentially establishes two different profiles of charitable donors starting in 2026:

1. Filers who take the standard deduction.
2. Filers who itemize deductions.

Depending on which group you belong to, the timing of your charitable contributions can lead to very different tax outcomes, which is especially important if most of your income and benefits come from years of work with Merck.

Below, we describe:

1. Who stands to gain from postponing some gifts until 2026.
2. Who stands to gain from increasing donations before or during 2025.

Group 1: Standard Deduction Filers

Why some people might prefer to wait and donate in 2026

Instead of itemizing, around 90% of Americans take the standard deduction, ¹ and many Merck employees and retirees may fall into this category. Under the current 2025 rules, standard deduction filers generally do not receive any direct tax benefit from charitable gifts unless they itemize.

In 2026, that will change. Specifically, a new above-the-line charitable deduction will be available to standard deduction filers beginning in the 2026 tax year: ²

- Up to $1,000 for single filers
- Up to $2,000 for married couples filing jointly

Key characteristics—written into the law:

- You do not need to itemize to claim this deduction.
- Only monetary donations given to approved public charities are covered.
- This deduction does not apply to supporting organizations or donor-advised funds.
- Non-cash gifts such as household goods, appreciated stock, and cryptocurrency are not eligible.
- The dollar limits are not indexed for inflation.

Real-world impact

In 2025, a cash donation made by a standard deduction filer is unlikely to produce any tax benefit unless that filer itemizes. If the same donor waits and gives in 2026, they may be able to deduct up to $1,000 or $2,000, depending on filing status.

For instance:

Let’s say you:

- Are married and filing jointly
- Typically donate $2,000 per year
- Expect to take the standard deduction in both 2025 and 2026
- Are in the 22% federal tax bracket

If you donate $2,000 in December 2025, you still take the standard deduction and do not gain any additional federal income tax savings from that gift.

If you instead donate $2,000 in January 2026, you can use the new $2,000 above-the-line deduction, which reduces your federal income tax by:

$2,000 × 22% = $440

Rules for documentation

Donors who give $250 or more in a single donation must obtain written confirmation stating that no goods or services were received in return for the contribution.

Who might use the standard deduction

While the standard deduction is available to all taxpayers, it may be used more often by:

- Retirees with relatively limited deductible expenses
- Younger individuals without many itemizable costs
- Higher earners who have few deductions left to itemize (for example, capped SALT deductions)

For these donors, including many who spent their careers at Merck, delaying certain cash gifts until early 2026 may turn previously non-deductible contributions into tax-efficient charitable giving.

Group 2: Itemizers

Reasons for wanting to accelerate gifts into 2025

For those who currently itemize, 2025 may be the final year before new deduction restrictions apply, so timing could matter for long-time professionals whose pay and benefits have grown over many years at Merck.

What changes in 2026?

New charitable “floor” of 0.5% of AGI

Starting in 2026, charitable contributions are only deductible to the extent they exceed 0.5% of adjusted gross income (AGI). ³

For example:

AGI: $300,000
0.5% floor: $1,500
Only the portion of your charitable contributions above $1,500 is deductible.

The 60% AGI cap on cash contributions remains

Itemizers can generally deduct up to 60% of AGI in cash contributions to qualifying public charities. ³ Any contributions above this limit may be carried forward for up to five years. This cap applies in addition to the new 0.5% floor starting in 2026.

Example for a higher-income itemizer:

Let’s say you:

- Have AGI of $500,000
- Are in the 35% federal tax bracket
- Typically donate $25,000 per year

In 2025, before the new floor applies:

- Subject to the usual AGI limits, you may be able to deduct nearly the full $25,000.

In 2026:

- 0.5% of AGI = $2,500
- Only contributions above $2,500 are deductible
- Of your $25,000 in gifts, only $22,500 may be deductible
- Losing a $2,500 deduction at a 35% tax rate may increase your federal income tax by $875

This difference can be especially important for donor-advised fund strategies or large gifts that Merck professionals may plan as part of a broader legacy or estate plan.

Who might itemize

Usually, itemizers have:

- AGI above the national average
- High state and local taxes
- Deductible expenses such as meaningful mortgage interest
- Long-term charitable goals and multi-year giving plans

For these individuals, accelerating larger gifts in 2025 may result in a more favorable deduction position than waiting until 2026.

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Which Group Do You Belong To?

Delaying charitable giving until 2026 might be worth considering if:

- You typically use the standard deduction
- You give $1,000 to $2,000 or more to charities each year
- You do not expect to itemize in 2025
- You could shift a cash gift from December 2025 to January 2026 and potentially use the new above-the-line deduction

Giving before year-end 2025 might be more appealing if:

- You will itemize in 2025, or already know you will have substantial itemized deductions
- You intend to make sizable, flexible charitable gifts (for example, to a major institution or to a donor-advised fund)
- The new 0.5% AGI floor in 2026 would reduce the amount you can deduct
- Frontloading your giving in 2025 allows you to keep more of your charitable deduction under the current rules

How We Help Clients Make These Decisions

At Wealth Enhancement, when we review charitable planning for employees and retirees from large companies such as Merck, we consider:

- Income tax planning under the One Big Beautiful Bill Act
- Health care and long-term care needs
- Multigenerational strategies and estate planning
- Business, stock option, or liquidity events that influence annual income

We help families:

- Evaluate the likelihood that they will itemize in both 2025 and 2026
- Set charitable giving goals over a three- to ten-year period
- Compare donating in 2025 versus shifting gifts into 2026
- Coordinate planning with estate planning attorneys and certified public accountants

How The Retirement Group Can Help Merck Employees

The Retirement Group can walk through the numbers with you and design a charitable giving approach that fits within your broader retirement strategy if you are unsure whether your 2025–2026 charitable plan should involve delaying or accelerating gifts as a current or former employee of Merck.

Call (800) 900-5867 to discuss how your charitable plans fit alongside your pension, 401(k), and other retirement benefits.

Next Steps

Before you write your next year-end charitable check:

- Confirm whether you expect to itemize or take the standard deduction.
- Review how the upcoming 2026 rules may affect your deductions.
- Consider whether shifting gifts into 2025 or 2026 could improve your overall tax outcome.
Reach out to Wesley Boudreaux or Kevin Landis, CFP®, at Wealth Enhancement, and consider coordinating with The Retirement Group to determine which path best aligns with your goals as a long-term employee or retiree from Merck.

Sources:

1. Forbes Advisor. ' Standard Deductions For 2024-2025 Tax Returns And Extra Benefits For People 65+ ,' by Taylor Tepper. Oct. 8, 2025.

2. “One Big Beautiful Bill (OBBB): Impact on Charitable Giving.” Fidelity Charitable , 2025,
https://www.fidelitycharitable.org/articles/obbb-tax-reform.html .

3. “Navigating Charitable Giving in the Wake of New Tax Reform.” National Philanthropic Trust , 30 July 2025,
https://www.nptrust.org/philanthropic-resources/philanthropist/navigating-charitable-giving-in-the-wake-of-new-tax-reform/ .

Other Resources:

1. “New Limitations on Charitable Deductions Take Effect in 2026.” Greenberg Traurig , 28 Oct. 2025,
https://www.gtlaw.com/en/insights/2025/10/new-limitations-on-charitable-deductions-take-effect-in-2026

2. “The OBBBA Clock Is Ticking: Why 2025 Might be the Year to Act for Maximum Charitable Deductions.” Vanilla , 28 Oct. 2025,
https://www.justvanilla.com/blog/obbba-year-end-charitable-planning-2026 .

3. “Charitable Organizations: Substantiation and Disclosure Requirements.” IRS , 30 Sept. 2025,
https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-organizations-substantiation-and-disclosure-requirements .

How does Merck's new retirement benefits program support long-term financial security for employees, particularly regarding the changes to the pension and savings plans introduced in 2013? Can you elaborate on how Merck's commitment to these plans is designed to help employees plan for retirement effectively?

Merck's New Retirement Benefits Program: Starting in 2013, Merck introduced a comprehensive retirement benefits program aimed at providing all eligible employees, irrespective of their legacy company, uniform benefits. This initiative supports Merck's commitment to financial security by integrating pension plans, savings plans, and retiree medical coverage. This approach not only aims to help employees plan effectively for retirement but also aligns with Merck’s post-merger goal of standardizing benefits across the board.

What are the key differences between the legacy pension benefits offered by Merck before 2013 and the new cash balance formula implemented in the current retirement program? In what ways do these changes reflect Merck's broader goal of harmonizing benefits across various employee groups?

Differences in Pension Formulas: Before 2013, Merck calculated pensions using a final average pay formula which typically favored longer-term, older employees. The new scheme introduced a cash balance formula, reflecting a shift towards a more uniform accumulation of retirement benefits throughout an employee's career. This change was part of Merck's broader strategy to harmonize benefits across various employee groups, making it easier for employees to understand and track their pension growth.

In terms of eligibility, how have Merck's pension and savings plans adjusted for years of service and age of retirement since the introduction of the new program? Can you explain how these adjustments might affect employees nearing retirement age compared to newer employees at Merck?

Adjustments in Eligibility: The new retirement program revised eligibility criteria for pension and savings plans to accommodate a wider range of employees. Notably, the pension benefits under the new program are designed to be at least equal to the prior benefits for services rendered until the end of 2019, provided employees contribute a minimum of 6% to the savings plan. This adjustment aids both long-term employees and those newer to the company by offering equitable benefits.

Can you describe the transition provisions that apply to legacy Merck employees hired before January 1, 2013? How does Merck plan to ensure that these provisions protect employees from potential reductions in retirement benefits during the transition period?

Transition Provisions for Legacy Employees: For employees who were part of legacy Merck plans before January 1, 2013, Merck established transition provisions that allow them to earn retirement income benefits at least equal to their current pension and savings plan benefits through December 31, 2019. This ensures that these employees do not suffer a reduction in benefits during the transition period, offering a sense of security as they adapt to the new program.

How does employee contribution to the retirement savings plan affect the overall retirement benefits that Merck provides? Can you discuss the implications of Merck's matching contributions for employees who maximize their savings under the new retirement benefits structure?

Impact of Employee Contribution to Retirement Savings: In the new program, Merck encourages personal contributions to the retirement savings plan by matching up to 6% of employee contributions. This mutual contribution strategy enhances the overall retirement benefits, incentivizing employees to maximize their savings for a more robust financial future post-retirement.

What role does Merck's Financial Planning Benefit, offered through Ernst & Young, play in assisting employees with their retirement planning? Can you highlight how engaging with this benefit changes the financial landscapes for employees approaching retirement?

Role of Merck’s Financial Planning Benefit: Offered through Ernst & Young, this benefit plays a critical role in assisting Merck employees with retirement planning. It provides personalized financial planning services, helping employees understand and optimize their benefits under the new retirement framework. Engaging with this service can significantly alter an employee’s financial landscape by providing expert guidance tailored to individual retirement goals.

How should employees evaluate their options for retiree medical coverage under the new program compared to previous offerings? What considerations should be taken into account regarding the potential costs and benefits of the retiree medical plan provided by Merck?

Options for Retiree Medical Coverage: With the new program, employees must evaluate both subsidized and unsubsidized retiree medical coverage options based on their age, service length, and retirement needs. The program offers different levels of company support depending on these factors, making it crucial for employees to understand the potential costs and benefits to choose the best option for their circumstances.

In what ways does the introduction of voluntary, unsubsidized dental coverage through MetLife modify the previous dental benefits structure for Merck retirees? Can you detail how these changes promote cost efficiency while still providing valuable options for employees?

Introduction of Voluntary Dental Coverage: Starting January 2013, Merck shifted from sponsored to voluntary, unsubsidized dental coverage through MetLife for retirees. This change aligns with Merck’s strategy to promote cost efficiency while still providing valuable dental care options, allowing retirees to choose plans that best meet their needs without company subsidy.

How can employees actively engage with Merck's resources to maximize their retirement benefits? What specific tools or platforms are recommended for employees to track their savings and retirement progress effectively within the new benefits framework?

Engaging with Merck’s Retirement Resources: Merck provides various tools and platforms for employees to effectively manage and track their retirement savings and benefits. Employees are encouraged to utilize resources like the Merck Financial Planning Benefit and online benefit portals to make informed decisions and maximize their retirement outcomes.

For employees seeking additional information about the retirement benefits program, what are the best ways to contact Merck? Can you provide details on whom to reach out to, including any relevant phone numbers or online resources offered by Merck for inquiries related to the retirement plans?

Contacting Merck for Retirement Plan Information: Employees seeking more information about their retirement benefits can contact Merck through dedicated phone lines provided in the benefits documentation or by accessing detailed plan information online through Merck's official benefits portal. This ensures employees have ready access to assistance and comprehensive details regarding their retirement planning options.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Merck offers a defined benefit pension plan with a cash balance formula. Benefits are determined based on years of service and compensation. Employees can choose between a lump-sum payment or a monthly annuity upon retirement.

Operational Changes: Merck is restructuring its business to focus more on its core pharmaceuticals and vaccines segments, leading to layoffs affecting around 1,800 employees (Source: Bloomberg). Strategic Initiatives: The company aims to enhance operational efficiency and invest more in research and development. Financial Performance: Merck reported a 10% increase in net sales for Q3 2023, driven by strong demand for its COVID-19 treatments and vaccines (Source: Merck).

Merck grants RSUs that vest over time, providing shares to employees upon vesting. The company also offers stock options, allowing employees to purchase shares at a fixed price.

Additional Articles

Check Out Articles for Merck employees

For more information you can reach the plan administrator for Merck at 2000 galloping hill road Kenilworth, NJ 7033; or by calling them at 908-423-1000.

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