How Are Charity Deductions Changing in 2026?
Starting in 2026, there are three critical changes to charity deductions affecting a broad range of generous taxpayers—namely modest, mid-level, and high-income donors, each in their own ways.
Before assuming the status quo on your charitable giving, it’s important to find out how these changes may affect your tax bill. And don’t wait until 2026. Why? You may find that a strategy of accelerating or deferring contributions from this year to the next could save you a measurable amount.
After all, the more you save, the more you can give.
The full picture including what has changed with the new tax bill and how it could affect your charitable giving specifically is a discussion best had with your tax advisor. There are three new rules to understand, however.
What’s the Impact to Standard Filers?
The deduction for standard filers has increased significantly. 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. That amount has ranged from zero to $600 in recent years, so it’s great news for the majority of Americans who don’t itemize their taxes.
However, take note: Non-itemizers who want to take advantage of this tax deduction cannot do so through donor-advised funds (DAF). If you typically take the standard deduction but also enjoy the flexibility and opportunities that DAFs offer, you’ll want to evaluate your options.
What’s the Impact to Mid-Level Taxpayers?
Secondly, taxpayers who itemize their deductions can deduct more and utilize DAFs, but they now face a new 0.5% AGI (adjusted gross income) floor. This could create a gap in deduction opportunities, particularly for mid-level taxpayers. For instance, if your AGI is $600,000, charitable deduction eligibility starts at $3,000 (while the cap for non-itemizers, again, is $2,000 for joint filers).
What’s the Impact to High-Income Taxpayers?
Finally, high-income taxpayers in the 37% tax bracket are capped at a 35% deduction benefit per dollar. Think of it as a $350 deduction instead of a $370 deduction on every $1,000 donated. (This rule extends to all itemized deductions, not only donations, by the way.) It’s a marginal change in the scheme of things, but worth considering for those in the top tax bracket who have come to rely on that higher benefit as part of their tax strategy.
As the landscape of charitable deductions evolves, staying proactive is essential to maximize both your giving and your tax benefits. Thoughtful navigation now ensures your philanthropy continues to make a meaningful impact for years to come.
Feel free to contact us with questions.