Beginning in 2026, sweeping changes to the tax treatment of charitable giving will affect both itemizers and non-itemizers, introducing new deduction limits, eligibility thresholds, and caps on the value of deductions. These reforms, enacted under the One Big Beautiful Bill Act (OBBBA), significantly reshape how taxpayers receive tax benefits for charitable gifts.
Understanding these new rules is essential for anyone who gives to charity and expects tax advantages from their generosity.
Key Changes to Charitable Giving Starting in 2026
New Charitable Deduction for Non-Itemizers
For the first time under these reforms, taxpayers who do not itemize deductions will again be allowed to claim a limited charitable deduction:
- Up to $1,000 for single filers
- Up to $2,000 for married couples filing jointly
- Applies to cash contributions only
This provision is designed to encourage charitable giving among households that normally take the standard deduction and previously received no federal tax benefit for donations. While modest, this new deduction restores some tax incentive for millions of taxpayers who do not itemize.
Example 1: Non-Itemizer (Single Filer)
Facts
- AGI: $70,000
- Charitable gifts: $1,000 (cash)
- Takes standard deduction
For 2025
- No charitable deduction allowed
- Tax benefit: $0
For 2026
- New non-itemizer deduction allowed: $1,000
- Tax bracket: 22%
- Tax savings:
$1,000 × 22% = $220
Net gain in 2026: +$220 in tax savings
Example 2: Married Non-Itemizers
Facts
- Joint AGI: $120,000
- Cash donations: $2,000
For 2025
- Deduction: $0
- Tax savings: $0
For 2026
- Deduction allowed up to $2,000
- Marginal bracket: 22%
- Tax savings:
$2,000 × 22% = $440
Net gain in 2026: +$440
New Minimum Floor for Itemizers
Taxpayers who itemize deductions will now face a new income-based threshold before charitable gifts become deductible:
- Only donations exceeding 0.5% of Adjusted Gross Income (AGI) will qualify
- Example:
- If your AGI is $200,000, the first $1,000 of donations produces no tax benefit
- Only gifts above that amount become deductible
This effectively creates a charitable “deductible”, similar to an insurance deductible, and reduces the tax value of smaller annual donations for higher-income households.
Itemizer Impacted by the New 0.5% AGI Floor
Facts
- AGI: $200,000
- Charitable donations: $2,000
- Itemizes in both years
- Marginal tax rate: 24% in 2025 → 28% in 2026
For 2025
- Full $2,000 deductible
- Tax savings:
$2,000 × 24% = $480
For 2026
- 0.5% AGI floor = $1,000
- Deductible amount:
$2,000 – $1,000 = $1,000 - Tax savings:
$1,000 × 28% = $280
Result: Despite a higher tax bracket, the donor loses
$480 – $280 = $200 in tax savings under the new floor rule.
New Cap on the Value of Deductions for High-Income Earners
Under current law, the tax savings from a charitable deduction generally reflect the donor’s full marginal tax rate. Beginning in 2026:
- The tax benefit of charitable deductions will be capped at 35%
- Even if a donor is in a higher tax bracket, the deduction will not reduce taxes beyond this limit
For high-income taxpayers in top brackets, this change reduces the tax leverage of large charitable gifts, potentially lowering the incentive for major one-time donations.
Side-by-Side Comparison: Charitable Giving Rules
2025 (Current Rules) vs. 2026 (New Rules)
| Feature | 2025 Rules | 2026 Rules (New Law) | Practical Impact |
| Non-Itemizer Deduction | No deduction | Up to $1,000 single / $2,000 joint (cash only) | Restores limited tax benefit for standard-deduction filers |
| Itemizer AGI Floor | None | 0.5% of AGI must be exceeded before deductions apply | Small gifts may no longer produce tax savings |
| Tax Value of Deduction (High Earners) | Full marginal tax rate (up to ~39.6%) | Capped at 35% | Reduces incentive for very large gifts |
| Cash Donation AGI Limit | 60% of AGI | Effectively reduced via caps and floors | Limits large one-year gifts |
| Corporate Deduction Rule | 10% of taxable income | Same (with 1% minimum threshold) | No change for corporations |
| Bunching Strategy | Useful | More important than ever | Helps donors exceed AGI floor |
Strategic Considerations for All Donors
With new floors, caps, and eligibility limits in place, charitable giving now requires significantly more tax planning than in prior years. Donors should evaluate:
- Whether their gifts will exceed the new AGI threshold
- Whether they fall under the new 35% deduction cap
- Whether they qualify for the new non-itemizer deduction
- How multi-year giving strategies affect total tax benefits
Bunching as a Key Strategy
One widely used approach under the new system is “bunching” donations, where:
- Several years of planned giving are combined into a single tax year
- The donor exceeds the AGI floor and fully utilizes itemized deductions
- Future years revert to standard deduction use
This can help donors maximize deductions in high-impact years while maintaining consistent charitable support.
Together, these reforms will reshape how taxpayers plan, time, and structure their charitable contributions.
Charitable giving will remain a powerful personal and social force—but beginning in 2026, tax efficiency will depend more than ever on careful planning, timing, and professional guidance.
Donors should strongly consider working with qualified tax and financial professionals to ensure their philanthropic goals align with the new tax reality and to avoid unintentionally losing valuable deductions.
