Charitable Deduction Changes for 2026: What Donors Need to Know

The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, changes how charitable contributions are treated for federal tax purposes starting with the 2026 tax year. Whether you itemize deductions or claim the standard deduction, these updates affect the tax value of your giving.

Below is a practical summary of what changed and how to plan around it.

Key Changes at a Glance

• New non-itemizer deduction: Standard deduction filers can now deduct up to $1,000 ($2,000 for married filing jointly) in cash donations to qualifying public charities
• New 0.5% AGI floor: Itemizers can only deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI)
• New 35% cap for high earners: Taxpayers in the 37% bracket receive only a 35% tax benefit from all itemized deductions, including charitable contributions

2026 Changes to Charitable Deductions

Non-Itemizer Deduction: Up to $1,000 or $2,000

Beginning in 2026, if you take the standard deduction, you can claim an additional deduction for cash donations made to qualified charities. The cap is $1,000 for single filers and $2,000 for married couples filing jointly.

This deduction does not reduce your adjusted gross income. Instead, it reduces your taxable income directly, sitting on top of the standard deduction rather than replacing it. That distinction can matter if your AGI affects other tax benefits you claim.

Roughly 150 million taxpayers claim the standard deduction each year, so this provision extends a charitable tax benefit to a much broader group of households.

What qualifies:

• Cash contributions only (check, credit card, online portals, payroll deduction)
• Donations to 501(c)(3) public charities that meet IRS requirements

What does not qualify:

• Contributions to donor-advised funds (DAFs)
• Contributions to private foundations
• Contributions to supporting organizations

The cap is firm. Any donation above the limit does not carry forward. If a single filer donates $1,500, only $1,000 is deductible, and the remaining $500 provides no additional tax benefit. The cap is also not indexed for inflation, so it will not increase in future years unless Congress acts.

0.5% AGI Floor for Itemizers

Beginning in 2026, if you itemize deductions, you can deduct charitable contributions only to the extent your total gifts exceed 0.5% of AGI. This floor applies to all types of charitable contributions, including cash, property, public charities, and private foundations.

How it works:

• Calculate 0.5% of your AGI
• Compare that threshold to your total charitable contributions
• Only the amount above the floor is deductible

Example: Your AGI is $200,000. The 0.5% floor is $1,000. If you donated $2,000 during the year, only $1,000 is deductible because the first $1,000 falls below the floor. For a nonprofit board member who gives $500 annually to the organization they serve, that entire contribution could become non-deductible if it falls below the floor.

This rule pushes donors to be more intentional about timing and total annual amounts, particularly when annual giving is modest relative to income.

Carryforward considerations: If you carried forward unused charitable deductions from before 2026, those carryforwards are likely not subject to the 0.5% floor, based on the statutory effective date. Carryforwards from 2026 contributions onward, however, will be. One important wrinkle: if the 0.5% floor is the only reason a 2026-or-later contribution is disallowed, that amount cannot be carried forward and is simply lost. This makes the bunching strategy discussed below especially relevant. The IRS has not yet issued formal guidance on these rules, so taxpayers with significant carryforwards should review their situation with a tax advisor before filing.

Note for C corporations: Similarly, C corporations may deduct charitable contributions to the extent that the total amount exceeds 1% of taxable income, and not more than 10% of taxable income. The portion below the 1% floor is not deductible in the current year but may be carried forward for up to five years, though only to years in which the corporation’s total charitable contributions exceed the 10% limitation.

35% Cap for High-Income Taxpayers

If you are in the top 37% federal income tax bracket, all itemized deductions, not just charitable contributions, are now limited so the effective tax benefit does not exceed 35%. This replaces the old Pease limitation that was suspended from 2018 through 2025.

Even if your marginal rate is 37%, the value of each dollar of itemized deduction is capped at 35 cents.

Example: Under prior rules, a $10,000 charitable deduction could reduce federal income tax by $3,700 (37% × $10,000). Under 2026 rules, that same $10,000 deduction generally produces $3,500 of tax savings (35% × $10,000). The deduction still exists, but its rate of benefit is lower for top-bracket taxpayers.

Because this cap covers all itemized deductions, including medical expenses, investment interest, and state and local taxes, high-income taxpayers face a broader reduction in tax benefit than the charitable provisions alone would suggest.

Existing Rules Still in Effect

AGI Percentage Limits

The 2026 changes do not replace existing AGI-based percentage limitations on charitable deductions. The OBBBA permanently set the cash-to-public-charities limit at 60% of AGI, which had been a temporary provision under the 2017 tax law. Excess contributions beyond applicable percentage limits can be carried forward for up to five years. The applicable limits vary based on what you give and which type of organization receives it.

The table below, adapted from IRS Publication 526, summarizes the deduction limits by contribution type and recipient organization.

* 50% limit organizations are those listed in §170(b)(1)(A) and include churches, educational organizations, hospitals, public charities, some private foundations, and governmental units.
** A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust or similar arrangement for that qualified organization.

Documentation Requirements

The 2026 changes affect how much you can deduct, not what you need to keep to support the deduction. If documentation is missing or incomplete, the IRS can disallow the deduction even when the gift was legitimate.

• Cash donations under $250: Keep a bank record or written receipt showing charity name, date, and amount.
• Cash donations of $250 or more: You need a contemporaneous written acknowledgment from the charity before you file. It must state whether you received any goods or services in return.
• Non-cash donations over $500: File Form 8283 (Noncash Charitable Contributions) with enough detail to support what was donated and how you valued it.
• Non-cash donations over $5,000: A qualified appraisal is often required, except publicly traded securities. Confirm requirements before donating. If an appraisal is required and not obtained, the deduction can be denied.

What You Cannot Deduct

Certain items remain non-deductible because they are not considered charitable contributions under IRS rules, or because the donor received a personal benefit in return.

• The value of your time or services: Volunteer hours and professional services are not deductible. Only out-of-pocket costs directly related to volunteering may qualify.
• Donations to individuals: Gifts made directly to a person, even for medical bills or emergencies, are personal gifts, not charitable donations. This includes many GoFundMe campaigns.
• Contributions to non-qualified organizations: Donations are deductible only if made to an IRS-qualified charity. Gifts to informal groups, unregistered nonprofits, or foreign organizations generally do not qualify.
• Foreign charitable organizations: Contributions to foreign organizations are not deductible, except for certain Canadian, Mexican, and Israeli charities under applicable tax treaties, and only if the donor has income from sources in those countries.
• Foreign charitable organizations: Contributions to foreign organizations are not deductible, except for certain Canadian, Mexican, and Israeli charities under applicable tax treaties, and only if the donor has income from sources in those countries.
• Political contributions: Contributions to candidates, PACs, or political parties are not charitable deductions.
• Raffle tickets, bingo, and lottery purchases: These are purchases, not gifts.
• Dues to social clubs: Membership dues to clubs organized for social or recreational purposes are not deductible.
• The value of goods or services received: If you receive something in return (event tickets, dinner, auction items), you can generally deduct only the portion that exceeds fair market value.

If any of these apply to giving you planned to claim, the strategies below can help redirect that intent toward deductible alternatives.

Planning Strategies for 2026 and Beyond

Consider Bunching Contributions

By concentrating multiple years of giving into one tax year, you may more easily clear the 0.5% AGI floor, itemize in the bunching year, and take the standard deduction in other years.

Example: Instead of giving $5,000 annually, donating $15,000 every three years clears the floor by a wider margin and creates a larger itemized deduction in that year. The goal is not to change your philanthropic intent, but to time gifts for better deductibility.

Donor-advised funds pair well with bunching. You take the deduction in the year you contribute to the DAF, then recommend grants to operating charities over time. DAF contributions do not qualify for the non-itemizer $1,000/$2,000 deduction, but they do qualify when you itemize.

When itemizing, DAF contributions are subject to both the 0.5% AGI floor and the 35% cap for top-bracket taxpayers. That is exactly why concentrating gifts into a single larger contribution can produce a better tax result than spreading the same total across multiple years.

Qualified Charitable Distributions

If you are age 70½ or older, qualified charitable distributions (QCDs) from an IRA can be highly tax-efficient. QCDs count toward your required minimum distributions (RMDs) and are excluded from taxable income entirely. Because QCDs are an income exclusion rather than a deduction, they are not subject to the 0.5% AGI floor or the 35% cap. They also do not require itemizing.

The annual QCD limit for 2026 is $111,000 per individual, indexed for inflation. For retirees who give regularly to charity, QCDs may now be the single most efficient giving vehicle available under the new rules.

Donate Appreciated Securities

Donating appreciated stock or other securities remains a powerful strategy. When structured properly, you may be able to deduct fair market value (subject to AGI limitations) and avoid capital gains tax on the appreciation, creating a combined tax benefit.

This approach is particularly relevant for real estate and construction business owners who hold appreciated investment positions or partnership interests, or for business owners in any industry who have held company stock through years of growth. The contribution must go to a qualifying public charity and must have been held for more than one year to receive the full fair market value deduction.

Contact WhippleWood

If you have questions about how the 2026 charitable deduction changes affect your tax situation, or want to explore giving strategies that fit your goals, WhippleWood can help. Our team works with Colorado individuals, nonprofits, and business owners to structure charitable giving for maximum impact. Contact us to discuss your situation.