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'Northrop Grumman 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.
Healthcare Provider Update: Healthcare Provider for Northrop Grumman: Northrop Grumman provides various healthcare benefits through multiple providers, including major insurers such as UnitedHealthcare, Aetna (CVS Health), Anthem (Elevance Health), and Cigna. Their offerings include comprehensive health insurance plans, which encompass medical, dental, and vision coverage to address the diverse needs of their employees. Potential Healthcare Cost Increases for Northrop Grumman in 2026: As Northrop Grumman navigates the complex landscape of healthcare costs, employees may face significant increases in their out-of-pocket expenses in 2026. Healthcare premiums are projected to rise sharply, with many states experiencing hikes of over 60%, driven by a combination of escalating medical costs and the potential loss of enhanced federal subsidies. A report from the Kaiser Family Foundation indicates that approximately 92% of ACA marketplace policyholders could see their premiums swell by more than 75%, reflecting the profound impact of regulatory changes and heightened insurer rate demands. This environment calls for proactive planning and financial preparation to mitigate the impending financial challenges associated with healthcare coverage. Click here to learn more
'For Northrop Grumman 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.
In this article, we will discuss:
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How the 2025–2026 rule changes may affect the tax benefits of your charitable gifts.
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The different charitable deduction rules for standard deduction filers versus itemizers.
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Strategies for timing your giving as a long-time Northrop Grumman 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 Northrop Grumman. 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:
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1. Filers who take the standard deduction.
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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 Northrop Grumman.
Below, we describe:
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1. Who stands to gain from postponing some gifts until 2026.
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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 Northrop Grumman 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
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- Up to $1,000 for single filers
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- Up to $2,000 for married couples filing jointly
Key characteristics—written into the law:
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- You do not need to itemize to claim this deduction.
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- Only monetary donations given to approved public charities are covered.
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- This deduction does not apply to supporting organizations or donor-advised funds.
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- Non-cash gifts such as household goods, appreciated stock, and cryptocurrency are not eligible.
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- 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:
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- Are married and filing jointly
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- Typically donate $2,000 per year
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- Expect to take the standard deduction in both 2025 and 2026
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- 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:
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- Retirees with relatively limited deductible expenses
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- Younger individuals without many itemizable costs
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- Higher earners who have few deductions left to itemize (for example, capped SALT deductions)
For these donors, including many who spent their careers at Northrop Grumman, 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 Northrop Grumman.
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:
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AGI: $300,000
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0.5% floor: $1,500
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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:
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- Have AGI of $500,000
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- Are in the 35% federal tax bracket
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- Typically donate $25,000 per year
In 2025, before the new floor applies:
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- Subject to the usual AGI limits, you may be able to deduct nearly the full $25,000.
In 2026:
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- 0.5% of AGI = $2,500
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- Only contributions above $2,500 are deductible
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- Of your $25,000 in gifts, only $22,500 may be deductible
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- 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 Northrop Grumman professionals may plan as part of a broader legacy or estate plan.
Who might itemize
Usually, itemizers have:
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- AGI above the national average
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- High state and local taxes
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- Deductible expenses such as meaningful mortgage interest
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- 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:
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- You typically use the standard deduction
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- You give $1,000 to $2,000 or more to charities each year
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- You do not expect to itemize in 2025
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- 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:
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- You will itemize in 2025, or already know you will have substantial itemized deductions
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- You intend to make sizable, flexible charitable gifts (for example, to a major institution or to a donor-advised fund)
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- The new 0.5% AGI floor in 2026 would reduce the amount you can deduct
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- 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 Northrop Grumman, we consider:
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- Income tax planning under the One Big Beautiful Bill Act
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- Health care and long-term care needs
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- Multigenerational strategies and estate planning
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- Business, stock option, or liquidity events that influence annual income
We help families:
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- Evaluate the likelihood that they will itemize in both 2025 and 2026
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- Set charitable giving goals over a three- to ten-year period
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- Compare donating in 2025 versus shifting gifts into 2026
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- Coordinate planning with estate planning attorneys and certified public accountants
How The Retirement Group Can Help Northrop Grumman 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 Northrop Grumman.
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:
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- Confirm whether you expect to itemize or take the standard deduction.
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- Review how the upcoming 2026 rules may affect your deductions.
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- Consider whether shifting gifts into 2025 or 2026 could improve your overall tax outcome.
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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 Northrop Grumman.
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 can Northrop Grumman employees effectively maximize their retirement income, and what role do pension plans and personal investments play in this strategy? It's important for employees to understand how components like the Pension Plan Benefits, Savings Plan Benefits, and Social Security Benefits collectively provide a robust retirement framework. This question invites a detailed exploration of how Northrop Grumman's various programs interact, and what actions employees can take to ensure they are optimizing their retirement savings.
Maximizing Retirement Income at Northrop Grumman: Northrop Grumman employees can maximize their retirement income by effectively leveraging the combination of Pension Plan Benefits, Savings Plan Benefits, Social Security Benefits, and Personal Savings and Investments. Each component plays a crucial role: the pension plan provides a defined benefit based on salary and years of service, the savings plan offers a vehicle for tax-advantaged growth through employee and employer contributions, and social security offers a baseline of income adjusted for inflation. Employees should aim to maximize their contributions, particularly to the 401(k) plan, and manage their investments according to their individual retirement timelines and risk tolerance.
What are the different types of retirement benefits available to Northrop Grumman employees, and how do these benefits impact retirement planning? Employees should be aware of the distinctions between defined benefit plans, like the Heritage TRW, and defined contribution plans, such as the 401(k) Savings Plan. This question will allow an in-depth examination of how these benefits function and their significance in the context of Northrop Grumman's overall compensation structure.
Types of Retirement Benefits: Northrop Grumman offers both defined benefit and defined contribution retirement plans. The Heritage TRW Pension Plan, a defined benefit plan, bases pensions on final average earnings and years of service. The 401(k) Savings Plan, a defined contribution plan, allows employees to save and invest with tax advantages, with contributions from both the employee and employer. Understanding these plans' structures and benefits is essential for employees to plan effectively for retirement.
In what ways have recent changes to the Northrop Grumman Pension Program affected employees who are planning to retire in the near future? Understanding the specifics of benefit adjustments or freezing final average earnings will be pivotal for employees' retirement planning. This inquiry will encourage discussion around how these changes influence both current and future retirees regarding their readiness for retirement and their financial planning.
Impact of Recent Changes to Pension Program: Recent changes to the Northrop Grumman Pension Program, such as the freezing of the final average earnings calculation as of December 31, 2014, affect employees planning to retire soon. These changes may alter the expected retirement benefits for some employees, making it crucial for near-retirees to reassess their projected pension benefits under the new rules and plan accordingly to meet their retirement goals.
How do Northrop Grumman employees qualify for early retirement under the current pension plan, and what benefits can they expect? This question should delve into the eligibility criteria for early retirement based on age and years of service, as well as highlight the benefits associated with this option. It provides an opportunity to explore the trade-offs and advantages of opting for early retirement versus working longer.
Early Retirement Qualifications and Benefits: Northrop Grumman employees can qualify for early retirement if they are at least 55 years old with 10 years of vesting service, receiving benefits reduced based on early retirement factors. Understanding these factors and the impact on the retirement benefits can help employees decide the best age to retire to maximize their pension benefits while considering their personal and financial circumstances.
What essential steps should Northrop Grumman employees take to prepare for retirement, including understanding their pension plan and social security benefits? This question can explore the various resources available, such as tools and calculators provided by Northrop Grumman, and the importance of proactive planning. Employees should consider how their decisions today will influence their retirement lifestyle, including the necessity of accumulating both pension and social security benefits.
Preparation Steps for Retirement: Employees should take proactive steps such as utilizing Northrop Grumman’s retirement calculators, attending planning seminars, and consulting with financial advisors available through the Northrop Grumman Benefits Center. It's also important for employees to understand how their pension benefits interact with Social Security and personal savings to create a comprehensive retirement strategy.
What options do Northrop Grumman employees have for managing their savings after retirement, and how can they choose the best strategy for their individual needs? Discussion here can encompass the different methods for drawing down retirement accounts, the importance of balancing withdrawals with ongoing expenses, and considerations for managing longevity risk. It is crucial for retirees to think about how they will provide for themselves throughout their retirement years.
Post-Retirement Savings Management: After retirement, Northrop Grumman employees need to manage their withdrawals from savings plans carefully to sustain their income throughout retirement. Considering factors like withdrawal rates, tax implications, and investment risk will help in maintaining a stable financial status in the retirement years.
How does Northrop Grumman determine the final average earnings (FAE) used in calculating pensions, and what factors should employees consider to impact this calculation positively? This question could lead to a discussion about the significance of high-earning years, the concept that only the top five consecutive earning years count, and how employees can strategically plan their careers to boost their FAE for retirement.
Determining Final Average Earnings (FAE): Northrop Grumman calculates FAE for pension benefits based on the highest five consecutive years of earnings. Employees should aim to maximize their earnings during these peak years, as this will directly increase the pension benefits they receive upon retirement.
What are the specific vesting requirements for Northrop Grumman's pension plans, and why is understanding these concepts critical for employees? As employees may leave the company at various stages of their careers, grasping how vesting works can significantly affect their financial security. This question allows for a detailed discussion on how years of service translate into non-forfeitable benefits.
Understanding Vesting Requirements: Vesting in Northrop Grumman's pension plans requires completing three years of service, after which the benefits earned become non-forfeitable. Employees should be aware of their vesting status, especially if considering changing jobs, as it impacts their eligibility for pension benefits.
How can Northrop Grumman employees effectively utilize the resources available through the Northrop Grumman Benefits Center for their retirement planning needs? This question invites exploration of what tools and guidance are obtainable through the Benefits Center, including contact methods, online resources, and personalized retirement evaluations, allowing employees to make informed decisions about their retirement.
Utilizing Northrop Grumman Benefits Center Resources: The Northrop Grumman Benefits Center offers tools, resources, and support for retirement planning. Employees should frequently use these resources, such as the retirement income calculator and personalized consultations, to plan effectively for their retirement.
How can Northrop Grumman employees find additional information regarding their retirement options and resources, including the most effective ways to contact the Northrop Grumman Benefits Center? With a focus on how to access support and information, this question emphasizes the role of company resources in assisting employees with their retirement strategies.ã€4:4†source】
Finding Retirement Information and Support: Additional information about retirement options and resources can be accessed through Northrop Grumman's Benefits Online portal and the Benefits Center. Employees are encouraged to actively use these channels for up-to-date information and personalized support to navigate their retirement planning effectively.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Northrop Grumman provides a defined benefit pension plan with a cash balance formula. The plan includes separate accounts for health benefits. Employees accrue benefits based on years of service and earnings, with options for lump-sum or monthly payments.
Restructuring and Layoffs: Northrop Grumman is laying off around 1,500 employees as part of a restructuring plan to improve operational efficiency (Source: Defense News). Strategic Adjustments: The company is focusing on its core defense and aerospace businesses. Financial Performance: Northrop Grumman reported a 6% increase in net sales for Q4 2023, driven by strong demand for its defense products (Source: Northrop Grumman).
Northrop Grumman grants RSUs that vest over several years, giving employees shares of the company. Additionally, stock options are provided, allowing employees to purchase shares at a set price.
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