This year there are three updated IRS tax provisions that could significantly influence decisions on charitable giving strategies, offering both expanded opportunities and important considerations for donors.
Charitable deductions for non-itemizers
Beginning in the 2026 tax year, a reinstated deduction allows non-itemizers to deduct cash donations to certain charities—up to $1,000 for single filers or $2,000 for married couples filing jointly. This provision is not indexed for future inflation, and donations to donor-advised fund sponsors and some private foundations are ineligible for the deduction.
Implication: Since the TCJA increased the standard deduction, only about 10% of households itemize their deductions,1 making the remaining 90% of households ineligible for charitable giving tax deductions. With the introduction of this provision, all households are now eligible to receive a tax deduction for qualified charitable contributions, potentially increasing participation in giving. A similar provision in 2020 and 2021 allowed a $300 deduction for charitable giving under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Approximately 90 million taxpayers claimed it in 2020–2021.
New floor on deductions for itemizers and corporations
Effective in the 2026 tax year, itemizers who make charitable contributions may only claim a tax deduction to the extent that their qualified contributions exceed 0.5% of their adjusted gross income (AGI). For example, a couple with an AGI of $300,000 can only deduct charitable donations in excess of $1,500. Similarly, corporations are only entitled to deduct charitable contributions to qualified charities that exceed 1% of their taxable income.
Implication: High-income individuals who itemize deductions should carefully consider the timing and amounts of their giving, and the strategies to maximize their deduction. For example, a bunching strategy or an approach of making larger gifts with less frequency can be more effective under the new rules. Corporations may want to take steps to proactively manage (and potentially increase) their giving to ensure they exceed the 1% threshold. Additionally, companies may benefit from consulting a tax advisor, especially if they operate on a fiscal year rather than a calendar year, to understand how the new rules apply.
New limits to deductions for itemizers in the top tax bracket
In addition to the floor, the new legislation caps the tax benefit of itemized charitable deductions at 35% for those in the 37% marginal tax bracket. In other words, these high-income filers donating $1,000 would see the value of their deduction limited to $350 when previously it was $370. This change is effective for the 2026 tax year.
The statement above is provided for informational purposes only. Please consult a tax professional to understand how this may affect your tax filing.