Giving to charity will be very different in 2026.
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Charitable giving will be different for many donors in 2026. The One Big Beautiful Bill Act (OBBBA) signed into law in July significantly changed the tax rules for charitable gifts, making it possible for more taxpayers to benefit, but imposing new limits on others. Here’s what you need to know.
Who benefited from the charity deduction rules before the change?
Since the charitable deduction was created in 1917, taxpayers have had to itemize their deductions to claim it (and that’s still true for tax year 2025 — you’ll use Schedule A). That means taxpayers who didn’t itemize — about seven in ten taxpayers in tax year 2016 — didn’t get a tax credit. When the tax laws changed in 2017, boosting the standard deduction, the number of taxpayers analyzed dropped even more. Now, fewer than one in ten taxpayers itemize their deductions.
As the standard deduction increases, the number of households that itemize their returns decreases – this affects charitable giving.
Kelly Phillips Erb
What has been the impact on charitable giving? Tax Policy Center estimates that the law cut the share of households that break down their charitable giving by more than half, from 21 percent to about 9 percent. The share of middle-income households claiming the charitable deduction fell by two-thirds, from around 17% to just 5.5%.
The standard deduction got another boost in 2025, thanks to the OBBBA. In 2025, the standard deduction retroactively increased to $15,750 for single taxpayers and married individuals filing separately, $31,500 for married couples filing jointly, and $23,625 for heads of household. (In 2026, the standard deduction will increase to $16,100 for individuals and married couples filing separately, to $32,200 for married couples filing jointly, and to $24,150 for heads of household.)
Charitable donation for taxpayers who don’t analyze
This time, however, Congress has an answer for charities worried that the increase could lead to another drop in charitable giving: a new deduction for taxpayers who don’t itemize. Beginning in 2026, taxpayers claiming the standard deduction can claim a charitable giving deduction of up to $1,000 for single filers and up to $2,000 for married couples filing jointly.
There are some limitations. Donations must be cash contributions to recognized public charities—this means no gifts to donor-advised funds or private foundations (you can read more about private foundations here).
New floor and limits for itemized discounts
Itemized taxpayers are not so lucky. OBBBA limits these deductions starting in 2026 by adding a floor—only the portion of your charitable contributions that exceeds 0.5% of your Adjusted Gross Income (AGI) is deductible.
Here’s what the math looks like. Let’s say your AGI is $100,000, you itemize your deductions, and your gifts totaled $5,000. The floor limits your deduction to $4,500, since the first $500 (0.5% of $100,000) won’t count. This threshold effectively reduces the deduction relative to income.
Otherwise, the regular charitable deduction rules remain in effect. This means, for example, that cash gifts to public charities are deductible up to 60% of your AGI. Long-term appreciated assets, such as inventory, are generally deductible up to 30% of your AGI. If you give more, all is not lost, as extra amounts can be carried forward for up to five years.
What about the Corporate Gift?
There is a new floor for corporate donors as well. From 2026, companies will have to contribute at least 1% of their taxable income before their charitable gifts can qualify for a deduction – previously, there was no minimum. This means that the first 1% of a company’s taxable income donated to charity does not generate a tax deduction.
The rule limiting corporate charitable deductions to 10% of taxable income still applies (gifts in excess of the 10% cap can be carried forward for up to five years). This means that only contributions that exceed the minimum of 1% and do not exceed the maximum of 10% are deductible in the current year.
Discount terms for high income donors
Donors in the top federal tax bracket (37%) will also find that the tax benefit of a charitable donation will be limited to 35% in 2026. This reduces the actual tax savings per dollar given.
The reason? Change in how high-income taxpayers benefit from itemized deductions under the OBBBA. Before 2017, the Pease limitations reduced the amount that taxpayers at the top could effectively deduct. The Tax Cuts and Jobs Act eliminated the Pease restrictions, but the OBBBA introduced a new, similar cap for taxpayers in the first bracket. A new formula now effectively limits the tax benefit of itemized deductions for those in the 37% tax bracket to 35%. (For 2026, that top bracket starts at $640,601 for singles and $768,701 for married couples filing jointly.)
What does this look like? Usually, the value of the donation for tax purposes is equal to the donation multiplied by your tax rate. But with the new haircut, the math looks a little different at the top. If you’re in the highest bracket and give $10,000, your rebate is “worth” $3,500 for tax purposes instead of $3,700.
What about high net worth donors?
The federal estate tax exemption also remains in effect, but at a higher amount. Under the OBBBA, the federal estate tax exemption was increased to $15 million per individual (or $30 million per couple). Charitable donations are exempt from federal estate tax, so a taxpayer with an estate worth $17 million could leave $2 million to charity and his estate would pay no federal estate tax (otherwise, $745,800 would go to Uncle Sam).
What about taxpayers with retirement accounts?
Taxpayers who have taken assets away from retirement plans also have options. A qualified charitable distribution (QCD) allows donors age 70½ and older who have a traditional IRA to funnel money directly from an IRA to a qualified charity. These amounts can be used to meet required minimum distributions (RMDs) for the year, and the amount you donate is excluded from your taxable income — you won’t even have to itemize to do so. The total amount of QCDs you can exclude from your gross income increased to $108,000 in 2025 and increases to $111,000 in 2026.
(Roth IRAs do not qualify for QCD, but high-income donors with large traditional IRAs could consider converting a traditional IRA to a Roth and use the charitable deductions to offset the income from the conversion.)
Additionally, as part of SECURE 2.0, you can make a one-time election to donate a QCD to a shared interest entity, such as a charitable trust. The original limit was $50,000, but is adjusted for inflation to $54,000 in 2025 and will be $55,000 in 2026. Combining a QCD with a shared interest entity can provide multiple benefits, including a tax break for the donor and a predictable income stream for non-charitable children.
What should you be thinking now?
With changes around the corner, time is more important than ever.
High-tax donors should consider making gifts in advance at the end of 2025 to lock in the full 37% discount value before the cap comes into effect. But don’t give too much if you’re aiming for a reservation: any extra amount carried over to 2026 will be subject to the 35% cap.
You may also want to consider “combining” multiple years of gifts into one tax year to optimize your deduction. Because of the 0.5% AGI floor for items, grouping charitable gifts into a single tax year can result in a larger deductible amount above the floor.
Those who don’t itemize regularly can also benefit from bundling. If you’re thinking about a large gift—over the $1,000 limit for the new non-registrant deduction—consider making a larger gift in one year and skipping a year or two. The gift should be big enough to motivate you to do the items. For example, if you want to give $6,000 a year to your alma mater for three consecutive years, consider donating $18,000 in a single year. Your total expense is the same, but instead of being limited to $1,000 for each of the three years (for a total deduction of $3,000), you can claim the entire $18,000 deduction in one year (subject to the threshold, of course).
If you want to make a gift now to avoid income and threshold restrictions, but aren’t sure which charity to support, consider a donor-advised fund or DAF. A DAF is an account set up at a public charity. Donating to a donor-advised fund usually makes you eligible for an immediate tax deduction, even if the money isn’t immediately given to charity. Funds in a DAF are invested and you can make grant recommendations to any qualified public charity, trickling the money over time. Remember that you must itemize to benefit from donating to a DAF.
What kind of gifts should you give?
If you’re hoping to get a charitable deduction and don’t itemize, donate cash (but remember you must donate to a public charity, not a private foundation or donor-advised fund).
If you itemize your deductions, consider donating appreciated stocks or other long-term assets. You will benefit from the charitable deduction on the fair market value of the assets while avoiding capital gains tax, which is a win-win.
Still have questions?
With so many changes coming, it’s important to keep up with IRS rules and guidelines. The new law could affect everything from how much of your gifts are deductible to whether they are deductible at all. And for people with assets and seniors, you’ll want to consider how best to use retirement accounts or plan for larger contributions to maximize benefits. If you have questions, ask your tax professional.
