Do you regularly donate to charity? In the past, you may have derived generous tax benefits for your contributions without much forethought. Or perhaps you didn’t bother to consider potential write-offs before donating because you assumed you wouldn’t be eligible. In either case, you should know that some of the charitable deduction rules have changed for 2026.
Under the One Big Beautiful Bill Act (OBBBA), enacted last year, there are new obstacles for some donors and new tax-saving opportunities for others. Much depends on whether you itemize deductions or claim the standard deduction on your individual federal income tax return.
Basic Guidelines
Within certain limits, you can potentially deduct contributions made to qualified charitable organizations if you adhere to IRS recordkeeping requirements. You must, for example, substantiate cash contributions with a receipt, bank record, payroll record or similar documentation. And you must substantiate those of $250 or more with a written acknowledgement from the charity. Also, you need to obtain such documents by the earlier of the date you file the return or the due date (including extensions).
Generally, your deduction for cash contributions to public charities can’t exceed 60% of your adjusted gross income (AGI). You may carry forward any remainder for up to five years. The Tax Cuts and Jobs Act (TCJA), enacted in 2017, raised the limit from 50% of AGI to 60% for 2018 through 2025. And the OBBBA permanently extends this higher ceiling. (We’ll discuss the new law’s impact in further detail below.)
Other special rules apply to gifts of property, and the percentage-of-AGI limits are often lower than for cash gifts — such as 30% for certain appreciated property gifts to public charities. Generally, any excess may be carried forward up to five years. If you claim a deduction for donations of noncash property over $5,000, you usually must obtain a qualified appraisal and attach IRS Form 8283 to your return. You can’t simply value the donated property yourself.
But here’s the kicker: For 2025 and most previous tax years, charitable donations are deductible only if you itemize deductions on your tax return. Itemizing saves taxes when your total allowable itemized deductions — including charitable contributions — exceed the applicable standard deduction. However, because of the TCJA’s changes, including a significant increase in the various standard deduction amounts, fewer individuals itemize today.
New Law’s Impact
This is where the OBBBA adds a few twists and turns that go into effect beginning with 2026 returns that will be filed in 2027. For starters, it installs a new floor on charitable deductions for itemizers, effectively reducing their annual write-offs. But the OBBBA also provides new tax incentives for nonitemizers. These developments may significantly impact your 2026 donation strategies. Here’s how it breaks down for both groups:
Itemizers face stricter limits. First, charitable donations are deductible only to the extent that, in total, they exceed 0.5% of your AGI. This operates like the 7.5%-of-AGI floor for medical expense deductions. So, if your AGI is $100,000, and you donate $5,000 during the year, your deduction is reduced to $4,500. You may be able to carry forward disallowed amounts, but the rules are complex, and the floor can continue to limit what’s deductible in later years.
In addition, the OBBBA reduces the benefit of itemized deductions — including charitable deductions — for high-income taxpayers. Beginning in 2026, the benefit for those in the top 37% tax bracket will generally be as if they were in the 35% bracket. For example, if you’re in the 37% bracket and have $10,000 in charitable deductions after exceeding the AGI floor, the deductions will save you $3,500 in taxes rather than $3,700 in taxes.
For 2026, this applies only to 1) single filers and heads of household with taxable income above $640,600, 2) married couples filing jointly with taxable income above $768,700 and 3) married individuals filing separately with taxable income above $384,350.
Nonitemizers get a permanent deduction. Beginning in 2026, taxpayers can deduct up to $1,000 in cash contributions to qualified public charities, or $2,000 for joint filers. The definition of “cash contribution” may be broader than you think. It includes gifts made by debit or credit card, check, electronic bank transfer, online payment platform, and payroll deduction.
Unlike the charitable deduction for itemizers, these write-offs have no floor. However, gifts to donor-advised funds or private foundations aren’t eligible. Also, donations exceeding the $1,000/$2,000 limit can’t be carried forward.
Practical Approach
So, how can you lay the groundwork for a viable charitable giving tax strategy this year? Begin by discussing with your tax advisor whether it will likely make sense for you to itemize on your 2026 or 2027 returns. Absent extenuating circumstances, plan to make donations in the year in which you’ll receive the maximum tax benefit.
For instance, if you don’t expect to itemize for 2026 but do expect to for 2027, you might “bunch” cash donations into 2026 up to the $1,000/$2,000 limit (whichever applies to you) because your 2026 standard deduction won’t be reduced by 0.5% of your AGI. However, if you’re planning a large property gift, you might defer that donation to 2027, when you can potentially claim an itemized deduction for it.
Helping Hand
Be aware that other rules affecting charitable donation deductions may apply. For example, if you donate property to an eligible charity, how the charity uses the property may impact the amount of your deduction. Work closely with your tax advisor to ensure compliance with all applicable rules. With a helping hand, you can develop a strategy under current law that maximizes the tax benefits for your situation.
New Boundaries for C Corporation Donations
If you’re a shareholder in a C corporation that intends to donate to charity this year, be sure to catch up on the latest tax law developments. The One Big Beautiful Bill Act (OBBBA) creates new boundaries.
Under previous law, deductions for C corporations were limited to 10% of the company’s taxable income. Any excess could generally be carried forward for up to five years. So, if a small C corporation earned $1 million in 2025 and donated $120,000, the deduction would be limited to $100,000, and $20,000 could be carried forward to 2026.
However, things become slightly more complicated under the OBBBA. For tax years beginning in 2026 or later, the new law imposes — for the first time ever — a 1% of taxable income floor on charitable deductions for C corporations. Donations are deductible only to the extent that, in total, they exceed the 1% floor. Note that the 10% deduction ceiling isn’t going away; the two thresholds work in tandem.
If a C corporation’s contributions exceed the 10% ceiling, it may generally carry forward the excess. What’s more, under the OBBBA rules, the amount disallowed by the 1% floor may also be carried forward. But if the corporation’s contributions don’t exceed the 10% ceiling, carryovers generally aren’t allowed. Additionally, C corporations may be eligible for other charitable tax breaks for certain donations. For example, they may claim an enhanced deduction for donations of inventory to a public charity if the items are specifically used for the care of the “ill, needy, or infants,” according to the IRS. Consult your tax advisor for more information and assistance.
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Brought to you by: Duffy Kruspodin, LLP
