Significant updates to charitable contribution rules will take effect in 2026, impacting how both itemizers and nonitemizers claim deductions. While some taxpayers will face new limits, others — particularly those who take the standard deduction — may benefit from newly restored opportunities.
New Charitable Deduction Floor Begins in 2026
Under the One Big Beautiful Bill Act (OBBBA), individuals who itemize deductions will see a new reduction applied to their charitable contributions. Starting in 2026, your allowable charitable deduction will be decreased by 0.5% of your adjusted gross income (AGI).
How the New Floor Works
This means you can deduct only the portion of your charitable giving that exceeds 0.5% of your AGI.
AGI includes all taxable income and is reduced by certain above‑the‑line deductions, such as:
- Traditional IRA contributions
- Self‑employed retirement plan contributions
- Self‑employed health insurance premiums
- 50% of self‑employment tax
- Student loan interest
- Health Savings Account contributions
Example
If you and your spouse file jointly in 2026 with an AGI of $400,000 and donate $10,000, your deduction will be reduced by $2,000 (0.5% × $400,000).
Your allowable charitable deduction becomes $8,000.
Additional Itemized Deduction Limitation for High‑Income Taxpayers
A second limitation under the OBBBA will apply to individuals in the 37% federal income tax bracket beginning in 2026.
How This Limitation Works
Itemized deductions — including charitable contributions — will be reduced by the lesser of:
- 2/37 of your otherwise allowable itemized deductions, or
- 2/37 of your taxable income above the 37% bracket threshold
In practice, this adjustment generally reduces the tax benefit of itemized deductions so that high‑income taxpayers receive a benefit similar to being in the 35% bracket.
Order of Application
- The charitable deduction floor is applied first.
- Then the itemized deduction limitation applies — but only for high‑income individuals.
Planning Strategies for 2025 and Beyond
1. Consider Accelerating 2026 Donations Into 2025
If you expect to itemize in both years, making 2026’s planned donations early may help you avoid the new 0.5% AGI reduction.
2. Explore Ways to Reduce AGI in Future Years
Lower AGI means a smaller reduction in your charitable deduction. Potential strategies include:
- Realizing capital losses
- Increasing pretax or deductible retirement contributions
3. Use a “Bunching” Strategy
Instead of donating the same amount every year, you can combine multiple years’ donations into one tax year.
Example:
If you donate $10,000 in both 2026 and 2027 with a $400,000 AGI, each year your deduction is reduced by $2,000 — totaling $16,000 in deductions over two years.
If you instead donate $20,000 in 2027, the reduction remains $2,000, giving you $18,000 in deductions over the two‑year period.
However, bunching may not be ideal if skipping a deduction in one year pushes you into a higher tax bracket.
New Charitable Deduction for Nonitemizers in 2026
Taxpayers who take the standard deduction will once again be able to deduct certain charitable contributions beginning in 2026.
Key Details
- Deduction limit: $1,000 for single filers, $2,000 for joint filers
- Applies to cash contributions, including:
- Debit/credit card payments
- Checks
- ACH transfers
- Online payment platforms
- Payroll deductions
Note: This deduction does not reduce AGI.
Looking Ahead: What to Consider Now
Charitable deduction rules have always included various limits, such as eligibility requirements and substantiation rules. With new changes approaching, now is the time to:
- Review what you can deduct on your 2025 return
- Identify last‑minute planning opportunities
- Develop a 2026 charitable giving strategy
Consulting a tax professional can help ensure your giving aligns with both your philanthropic goals and your tax planning needs.