OBBBA Charitable Giving Shake-UP - Winners and Losers
Do you contribute to charitable organizations? If so, recent legislation—the One Big Beautiful Bill Act (OBBBA)—includes significant changes to the tax treatment of charitable donations, starting in 2026. Some are helpful, others less so, depending on your income and filing status.
Good News for Non-Itemizers
Currently, taxpayers who take the standard deduction (i.e., don’t itemize) generally cannot deduct charitable contributions. That will change in 2026.
Beginning in 2026, non-itemizers will be allowed to deduct cash donations to charity up to
Good News for Non-Itemizers
Currently, taxpayers who take the standard deduction (i.e., don’t itemize) generally cannot deduct charitable contributions. That will change in 2026.
Beginning in 2026, non-itemizers will be allowed to deduct cash donations to charity up to
- $1,000 per year for single filers, or
- $2,000 per year for married couples filing jointly.
Note. Contributions to donor-advised funds are excluded.
New Limits for Itemizers and High-Income Donors
If you itemize your deductions and make substantial charitable donations, take note: starting in 2026, your ability to deduct those donations will be reduced.
In 2026, you may deduct charitable contributions to the extent they exceed 0.5 percent of your adjusted gross income (AGI). Here’s how this new floor works:
Example. If your AGI in 2026 is $200,000 and you donate $10,000 to charity, only the amount over $1,000 (0.5 percent of AGI) is deductible. Your allowed deduction is $9,000.
You cannot carry forward the disallowed $1,000 unless your total charitable contributions for the year exceed one of the limits, such as 60 percent or more of your AGI for cash donations.
Changes for C Corporations
Regular C corporations are also affected. Beginning in 2026,
New Limits for Itemizers and High-Income Donors
If you itemize your deductions and make substantial charitable donations, take note: starting in 2026, your ability to deduct those donations will be reduced.
In 2026, you may deduct charitable contributions to the extent they exceed 0.5 percent of your adjusted gross income (AGI). Here’s how this new floor works:
Example. If your AGI in 2026 is $200,000 and you donate $10,000 to charity, only the amount over $1,000 (0.5 percent of AGI) is deductible. Your allowed deduction is $9,000.
You cannot carry forward the disallowed $1,000 unless your total charitable contributions for the year exceed one of the limits, such as 60 percent or more of your AGI for cash donations.
Changes for C Corporations
Regular C corporations are also affected. Beginning in 2026,
- charitable contributions are deductible to the extent they exceed 1 percent of a corporation’s taxable income; and
- the disallowed portion can be carried forward for up to five years if the total donations for the year exceed 10 percent of the corporation’s taxable income.
Planning Opportunities Before the Rules Change
Because the new limitations won’t take effect until January 1, 2026, you have a valuable opportunity to maximize deductions under the current rules in 2025:
Because the new limitations won’t take effect until January 1, 2026, you have a valuable opportunity to maximize deductions under the current rules in 2025:
- If you itemize, consider accelerating your charitable giving before year-end.
- You might double your planned donations in 2025 and scale back in 2026.
This strategy allows you to deduct the full amount of your contributions without the new 0.5 percent AGI floor.
Bunching Donations Going Forward
Once the new rules are in place, both individuals and corporations may benefit from a “bunching” strategy:
Bunching Donations Going Forward
Once the new rules are in place, both individuals and corporations may benefit from a “bunching” strategy:
- Combine multiple years of charitable giving into one year to exceed the new deduction thresholds.
- For example, you could donate two years’ worth of contributions in 2026 (and itemize), then take the standard deduction in 2027 while making little or no donations that year.
If you want to discuss charitable giving, please call me on my direct line at 713-857-6300.