Several major changes to charitable giving rules took effect at the beginning in 2026. The approximately 10% of donors who itemize their tax deductions likely received a better tax benefit under the old rules, but those taking the standard deduction are favored under new 2026 rules with a new above-the-line deduction.
Because tax law can be complex, the information in this article is intended for general informational purposes only. Readers should consult with their own professional tax, legal, or financial advisors before making decisions based on this information.
Most notably, the new tax legislation establishes a new above-the-line charitable deduction of up to $1,000 for individuals and $2,000 for couples who take the standard deduction. This offers a long-sought opportunity to incentivize non-itemizers to make more charitable contributions. Prior to the tax change, only the 10% or so of filers who itemize rather than take the standard deduction were eligible to deduct charitable contributions on their income taxes.
Over the past two decades, the sharp decline in the number of Americans who donate to charity has made philanthropy increasingly undemocratic. With fewer middle and working class households participating in charitable giving—down from 66% in 2000 to under 46% in 2020—the donor base has narrowed significantly. As a result, charitable dollars have increasingly been concentrated in the hands of the wealthy who exercise disproportionate influence over which causes and communities receive support. This shift mirrors the broader erosion of the middle class, as economic inequality limits the ability of everyday people to contribute meaningfully. In effect, philanthropy has increasingly become a top-down system where a small, affluent minority determines which needs are seen and funded versus which are ignored.
This part of the July 2025 federal tax package has the potential to reverse this trend by making charitable giving more affordable for those who have smaller amounts to give. It is extremely important to note, however, that there are some limitations on this new deduction. Donations to donor-advised funds (DAFs) and supporting organizations are excluded, and the deduction applies only to cash donations made to qualifying 501(c)(3) public charities. You can’t deduct for old clothes or furniture given to The Salvation Army, for example, nor can you write off donations to 501(c)(4) social welfare organizations that do a lot of lobbying, or deduct contributions made to political action committees (PACs).
One of the most significant tax changes impacting donors in 2026 is the introduction of a 0.5% of AGI floor for charitable deductions. Beginning in the 2026 tax year, only donations that exceed 0.5% of a taxpayer’s adjusted gross income will be deductible. This means many modest or periodic donations that itemizers routinely deducted in the past will no longer qualify. The change essentially raises the threshold for when charitable giving produces a tax benefit.
This table shows how much of a donation would be deductible before and after the 0.5% AGI floor took effect in 2026. (0.5% of $100,000 = $500 floor)
| Donation Amount | Deductible Before 2026 | Deductible 2026+ (After 0.5% Floor) |
|---|---|---|
| $100 | $100 | $0 |
| $250 | $250 | $0 |
| $500 | $500 | $0 |
| $750 | $750 | $250 |
| $1,000 | $1,000 | $500 |
| $2,500 | $2,500 | $2,000 |
| $5,000 | $5,000 | $4,500 |
Another change affects donors in the highest income bracket. Beginning in 2026, the value of itemized deductions, including charitable contributions, is capped so that each deductible dollar produces only 35 cents of tax benefit, rather than the 37 cents of tax benefit enjoyed in recent prior years. Anticipation of the 2026 changes prompted some high-income donors to accelerate charitable gifts in 2025 in order to capture the full 37-cent deduction value before the new limitation took effect.
| Tax Year | Marginal Tax Rate | Maximum Deduction Value | Tax Savings Per Dollar |
|---|---|---|---|
| Before 2026 | 37% | 37% | $0.37 |
| 2026 and Later | 37% | 35% cap | $0.35 |
| Category | Before (Pre-2026 Law) | After (Effective 2026) |
|---|---|---|
| Individual – Itemizers | Can deduct up to 60% of AGI for cash donations | Still allowed, but the .5% floor & a new cap on itemized deductions for high earners may reduce incentive |
| Individual – Non-Itemizers | No deduction (since 2022); temporary COVID-era deductions expired | NEW: Above-the-line deduction of up to $1,000 (single) or $2,000 (joint) for cash gifts to public charities |
| Eligible Donations (Non-Itemizers) | N/A | Must be cash only to public charities — no DAFs or supporting organizations |
| Standard Deduction | ~$15,750 (single), ~$31,500 (joint) in 2025 | Raised to $16,100 (single), $32,200 (joint) in 2026 |
| Corporate Deduction Limit | Up to 10% of taxable income, no floor. Excess contributions carryover allowed up to 5 years | Still 10% limit, but only for donations exceeding 1% of taxable income. Carryover rules still apply subject to 1% floor |
| DAF Contributions | Deductible for itemizers (subject to IRS rules) | Still deductible for itemizers, but excluded from new non-itemizer deduction |
The environment for itemized deductions overall is also changing. One key example is the substantial increase to the state and local tax (SALT) deduction cap starting in tax year 2025. For those in high-tax states or with significant property taxes, this higher cap may mean itemizing becomes more valuable again, since more SALT expense can be deducted.
However, the interaction of the higher SALT cap with the new charitable deduction floor in 2026 means that the mix of itemized deductions will shift. While more taxpayers may find themselves itemizing because of the expanded SALT deduction, they may also find that their charitable contributions do not clear the AGI threshold necessary to be deductible.
For older donors, required minimum distributions (RMDs) from traditional IRAs add another layer of consideration. Individuals age 70½ or older (at the time of distribution) can make a qualified charitable distribution (QCD) allowing them to direct up to a specified annual amount from their IRA straight to a charity. These transfers count toward satisfying the RMD but do not increase taxable income, which can keep a donor’s AGI lower and potentially prevent phase-outs or higher marginal tax brackets.
Qualified charitable distributions remain one of the most tax-efficient ways for retirees to give, regardless of whether or not they itemize. Because QCDs reduce income rather than create an itemized deduction, the tax benefit does not depend on the size of the standard deduction, the SALT cap, or the new 0.5% AGI floor on charitable deductions. As a result, RMD-eligible donors may find that directing part or all of their required distribution to charity offers consistent value even now that the new rules have taken effect.
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