In this season of charitable giving, it’s important to note the tax changes affecting charity deductions beginning in 2026 and how they might inform your strategy today and into the future.
In September, we brought you news of critical changes to charitable giving tax deductions that are on their way with the new tax bill.
How do these changes affect nearly every generous taxpayer?
To summarize:
- Those taking the standard deduction can now deduct up to $1,000 ($2,000 for joint filers) for charitable giving “above the line,” which means it’s in addition to an increased standard deduction.
- However, non-itemizers who want to take advantage of this tax deduction can no longer do so through donor-advised funds (DAF).
- Taxpayers who itemize their deductions can deduct more and utilize DAFs, but they now face a new 0.5% AGI (adjusted gross income) floor.
- High-income taxpayers in the 37% tax bracket are capped at a 35% deduction benefit per dollar. (This rule extends to all itemized deductions, not only donations, by the way.)
What Do These 2026 Tax Changes Mean for Charitable Giving?
Modest annual givers (giving up to $2,000 jointly) who give directly to charities and who do not itemize may get their best tax break from charitable giving beginning next year. For others, proceed with caution.
For instance, any taxpayer who contributes to a DAF at any level will want to investigate their strategy moving forward. Would accelerating your giving this year make more sense? What about bundling donations typically reserved across multiple years into a larger donation and itemizing in a single year to exceed that 0.5% AGI floor? For high-income taxpayers, how will the 35% cap affect your tax bill?
If you’re a business owner or stakeholder involved in corporate giving, it’s vital to note changes in this area as well. For instance, deductions at the corporate level will apply only if giving exceeds 1% of the corporation’s taxable income and includes a 10% floor with a five-year carry forward for unused deductions.
What Charitable Giving Tax Tips Remain Unchanged?
For any donation, understand what type of giving and which organizations qualify for deductions, particularly when giving to charities abroad. Beware of charity scams and always check to be sure the organization is an approved 501(c)3 in good standing. The IRS offers an online tool to help you do that. Then, research the charity through a site like Charity Navigator to be sure its financial health, accountability, transparency and other factors are up to your own standards.
Charitable giving remains as critical as ever. But it’s also important to proactively understand how tax changes affect your giving. After all, the more you save on taxes, the more you have to give.
Feel free to contact us with questions.