Charitable giving has always been a meaningful way for Americans to support the causes they care about—while also receiving a potential tax benefit.
With the passage of the One Big Beautiful Bill Act (OBBBA) in July of this year, several important changes to the rules surrounding charitable donations are on the horizon. These changes, which take effect in 2026, could impact both itemizers and non-itemizers alike.
Here’s a straightforward look at what’s changing and what it could mean for your giving strategy:
1. A new deduction for non-itemizers
Taxpayers who do not itemize will soon be able to deduct up to $1,000 in qualified charitable donations ($2,000 for married couples filing jointly).
While the law also raises the standard deduction to $15,750 per person ($31,500 per couple), this additional charitable deduction is intended to encourage more people to give.
However, it’s worth noting that not all donations qualify—for example, contributions to donor-advised funds, while still deductible for itemizers, are excluded from this $1,000 tax deduction.
2. A new threshold for itemizers
For those who do itemize, the new law introduces a floor: only charitable donations exceeding 0.5% of adjusted gross income (AGI) may be deducted.
For instance, a couple with an AGI of $500,000 could only deduct charitable gifts above $2,500. This change limits smaller deductions but continues to give a tax benefit for more substantial giving.
3. A cap on deductions for high earners
Taxpayers in the 37% marginal bracket will also see a new limitation. The OBBBA caps the tax benefit of charitable deductions at 35%.
For example, an individual with $650,000 in AGI who donates $30,000 would see the allowable deduction reduced from $11,100 to about $9,362.50 under the new formula
Planning ahead
Because these changes won’t take effect until 2026, there’s still time to plan.
Donors who anticipate significant charitable contributions may want to accelerate their giving into 2025 to take advantage of current rules.
Looking beyond that, taxpayers in lower brackets might consider a “bunching” strategy, combining multiple years’ worth of planned donations into a single tax year, to continue maximizing the available tax benefits.
As always, consulting with a qualified financial or tax advisor can help you determine the most effective strategy for your charitable goals under the new law.
