2026 Brings Big Changes To Charitable-Deduction Rules

Now that we’re into 2026, many provisions of last year’s One Big Beautiful Bill Act (OBBBA) are coming to life. One set of tweaks brings major changes to the tax treatment of charitable contributions, getting non-itemizers back into the tax-saving game but curtailing tax benefits for itemizers and higher-income filers. 

Ever since standard deductions were nearly doubled in 2018, far fewer Americans have been itemizing their deductions — only about 9% in recent years. For the masses, that reduced the appeal of charitable donations, since the only way to benefit from contributions was via an itemized deduction. Losing a major selling point, the country’s charities pushed for the creation of an “above-the-line” deduction for non-itemizers. With the 2025 OBBBA, their ship came in. 

In 2026, single people who take the standard deduction can deduct up to $1,000 in cash gifts to qualified 501(c)(3) public charities. For married couples, it’s $2,000. You can’t take an above-the-line deduction for contributions to donor-advised funds or private foundations. As usual, the IRS requires that you have a written acknowledgement from a charity that you give $250 or more. Unlike itemized charitable contributions, there’s no carry-forward for contributions that exceed your cap on the deduction in a given year. This new deduction feature of the tax code has no expiration date, and it will be adjusted for inflation going forward.

Non-profit institutions are welcoming the change. “The new above-the-line deduction will make it easier for Americans to support causes they care about,” says Daniel McAdams, executive director of the Ron Paul Institute for Peace and Prosperity. “A healthy non-profit sector is critical to a free society.”   

While the OBBBA is all good news for the standard-deduction crowd, the new law tightened charitable tax-deductions for those who itemize. Specifically, they can only deduct charitable gifts to the extent they exceed 0.5% of adjusted gross income. For example, if your 2026 AGI is  $100,000, you can only deduct the amount of your total contributions that exceeds $500. So, if you made a total of $2,000 in donations to all your chosen charities, you could only take a $1,500 itemized deduction.

In light of that 0.5% AGI floor, one way for itemizers to optimize donations is by “bunching them” in a single tax year. With that strategy, someone who’d intended to donate money to charities at a pace of $2,000 per year might instead donate $4,000 in 2026 and then come back with another round of bunched contributions in 2028.  

OBBBA also brought a new reduction in tax benefits enjoyed by high-income donors. Generally, taxpayers can calculate the benefit of a tax deduction by multiplying it by their marginal tax rate. For example, someone who’s in the 22% tax bracket gets $22 in tax benefits for a $100 donation. Now, however, those in the highest 37% tax bracket will see their tax benefit limited to 35%. In 2026, the 37% bracket applies to taxable income above $640,600 for singles and $768,700 for married couples filing jointly. 

While US nonprofits are getting a boost in the form of the new above-the-line deduction, they also face economic headwinds thanks to the declining power of the US dollar, and increased prices thanks to tariffs. “47% of charitable donors have given less in the past 12 months due to inflation,” nonprofit fundraising and marketing firm RKD Group reported in September.