October 22, 2026
Starting with the 2026 tax year, the One Big Beautiful Bill Act (OBBBA) changes how many individuals can deduct charitable contributions on their federal income tax returns. These rules apply to gifts to qualifying charities such as churches, schools, hospitals, and most recognized nonprofit organizations.
New Deduction for those who do nOT Itemize
If you take the standard deduction and do not itemize, you generally did not get any tax benefit for your charitable giving.
Under the OBBBA, for tax years beginning after December 31, 2025, you may now deduct certain cash contributions even if you do not itemize:
Up to $1,000 if you file as single or head of household, or
Up to $2,000 if you file as married filing jointly.
These amounts are for cash gifts only to qualified charities and are deducted when your taxable income is calculated (not in the calculation of your adjusted gross income).
New 0.5% rule (floor) for those who DO itemize
If you itemize deductions, your total charitable deduction is now subject to a new "floor" beginning with tax years after 2025. Your allowable charitable contributions are reduced by 0.5% (one-half of one percent) of your contribution base (essentially your adjusted gross income).
In simple terms, this means that your charitable giving must exceed 0.5% of your income before any of it produces a tax deduction. Amounts below that threshold effectively no longer reduce your taxable income. Existing percentage limits (such as the 60% limit for cash gifts to public charities) still apply above this new floor.
This new 0.5% floor does not apply to Qualified Charitable Distributions (QCDs) made directly from an IRA to an eligible charity. Because a QCD is excluded from taxable income rather than claimed as an itemized charitable deduction, it can still provide a tax benefit without being reduced by this new floor.
What kinds of gifts qualify? Cash vs. in-kind gifts
The new nonitemizer deduction applies only to qualified cash contributions. Cash gifts include payments made by:
Cash
Check
Credit or debit card
Electronic funds transfer
To qualify, the cash must be given to an eligible charity (such as a church, school, hospital, or other public charity described in the tax law), and cannot be made to supporting organizations or donor-advised funds. Cash contributions carried over from earlier years do not count toward this new nonitemizer deduction.
In-kind (non-cash) gifts include donations of property rather than money, such as:
Clothing, furniture, household items
Cars or other vehicles
Stocks, mutual funds, or other investments
These non-cash gifts can still be deductible if you itemize, usually at fair market value subject to special rules and percentage limits, but they do not qualify for the new cash-only deduction for non-itemizers.
How these changes affect different types of filers based on giving amount
Taxpayers with modest or occasional giving who take the standard deduction (non-itemizers)
If you typically give smaller amounts and do not itemize, you may now see a direct tax benefit from your cash gifts. For example, if you are single and give $400 in cash to qualified charities, you can deduct that $400 (up to the $1,000 limit) in computing taxable income, where previously you likely received no deduction at all.Taxpayers with modest giving who itemize
If you itemize, but your annual charitable giving is small relative to your income, you may be affected by the new 0.5% floor. Your total charitable contributions must exceed 0.5% of your contribution base (similar to your AGI) before any amount is deductible. In practice, this means some itemizers with relatively low giving may see reduced or no charitable deduction unless their giving increases.Taxpayers with significant annual charitable giving who itemize
If you regularly give a larger portion of your income, you are still allowed charitable deductions subject to existing percentage limits (for example, up to 60% of your contribution base for cash contributions to public charities). The new 0.5% floor will usually not be a concern because your giving already exceeds that level. However, a portion of your contribution will not be deductible. Excess contributions above the annual limits can still be carried forward for up to five years.Taxpayers with significant giving who do not itemize
If you give generously but continue to use the standard deduction, you may now claim up to $1,000 ($2,000 if married filing jointly) for cash contributions in computing taxable income. This provides additional tax benefit even if you decide that itemizing does not make sense for you in a given year.
As always, these rules are complex and depend on your income level, filing status, and the kinds of gifts you make. Please contact our office so we can review your specific situation and help you plan your charitable giving in a tax-efficient way under the OBBBA.