The One Big Beautiful Bill Act has led to changes in charitable contribution deduction rules for the 2026 tax year.
Here are some of the nuances:
Taxpayers Who Itemize
0.5% AGI Floor: You can only deduct charitable contributions to the extent you exceed 0.5% of your Adjusted Gross Income (AGI). For example, if your AGI is $300,000, the first $1,500 of your donation is not deductible. This includes both cash and non-cash contributions.
60% Cap: The ceiling for cash donations to public charities is permanently set at 60% of your AGI.
Haircut for the 37% tax bracket: For earners in the 37% tax bracket, the tax benefit of itemized deductions (including charitable gifts) is effectively capped at a 35% rate. This applies to single filers with taxable income above $640,600 and joint filers above $768,700.
Carry forward: Unused contributions exceeding the 60% cap can still be carried forward for up to 5 years, provided your initial total contributions cleared the 0.5% AGI floor.
Taxpayers Who Take The Standard Deduction
Non-itemizers can now claim a permanent above-the-line deduction for cash contributions made directly to qualified public charities. The limits are as below -
Single Filers: Up to $1,000
Married Filing Jointly: Up to $2,000
