Starting in 2026, the “One Big Beautiful Bill” (OBBB) introduces some important changes to how charitable donations are treated for tax purposes. Both donors and nonprofits need to understand these rules to maximize the impact of giving and ensure accurate tax planning.
Key Changes for Donors
Minimum Deduction Threshold (“Floor”)
- What It Is: Only donations above 0.5% of your adjusted gross income (AGI) are deductible if you itemize.
- Example: If your AGI is $200,000, the floor is $1,000. A $2,000 donation would only allow a $1,000 tax deduction (the amount above the floor).
Cap on Deduction Benefits
- What Changed: The tax benefit for charitable donations is now capped at 35% of the donation amount for high-income donors.
- Example: A $10,000 donation that previously yielded a $3,700 deduction would now provide a $3,500 deduction.
Universal Deduction for Non-Itemizers
- What It Is: Even if you don’t itemize, you can still deduct up to $1,000 (single) or $2,000 (married filing jointly) for cash donations to qualified charities.
- Important Note: Donations to donor-advised funds do not qualify for this universal deduction.
Permanent 60% AGI Limit for Cash Contributions
- The existing limit of 60% of AGI for cash contributions to public charities is now permanent.
What This Means for Donors
Under the new rules, if you itemize deductions, donations must exceed 0.5% of your income to be deductible. This minimum is called the “floor.” For example, if your income is $200,000, the floor is $1,000—so a $2,000 donation would only allow a $1,000 tax deduction (the amount above the floor). In addition, there is a cap on the deduction: the tax benefit for charitable giving is limited to 35% of the donation amount for high-income donors.
If you don’t itemize, you can still take advantage of the universal charitable deduction—up to $1,000 for singles or $2,000 for married couples filing jointly—for cash donations to qualified charities.
These changes mean donors may need to plan their giving carefully to maximize both their philanthropic impact and their tax benefits.
Tips for Nonprofits Communicating These Changes
- Inform Donors Early: Make sure donors know about the new rules before the 2026 tax year.
- Provide Examples: Use clear, concrete examples to illustrate how the floor and cap work.
- Encourage Planning: Suggest donors consult with tax professionals to optimize their giving strategies.
- Highlight Universal Deduction: Remind non-itemizers that they can still deduct up to $1,000–$2,000 in cash donations.
Strategies for Donors to Maximize Giving Impact
- Accelerate Donations: Consider giving larger donations before 2026 to take advantage of current rules.
- Bunch Contributions: Combine smaller donations into one larger gift to exceed the 0.5% floor.
- Use Donor-Advised Funds Strategically: They can still be helpful for itemizers, though they don’t qualify for the universal deduction.
- Explore Other Giving Vehicles: Charitable remainder trusts or donations of appreciated assets can provide additional tax advantages.
Bottom Line
The OBBB introduces both a minimum threshold and a cap for charitable deductions, but also expands giving opportunities for non-itemizers. Donors who plan ahead can continue to maximize both their tax benefits and philanthropic impact.
Want a quick reference?
Download our 2026 Charitable Giving Cheat Sheet for a simple, one-page overview of what donors need to know under the One Big Beautiful Bill.
Questions? Shoot us an email!
Disclaimer:
As of October 8, 2025, the IRS has not yet published consolidated guidance on these changes. This summary is based on the statute as enacted in H.R. 1 (the One Big Beautiful Bill), which takes effect for tax years beginning January 1, 2026. Donors should consult a qualified tax professional for advice specific to their situation.
