Big Changes Coming to Charitable Contribution Deductions Starting in 2026

Significant changes to how charitable contributions are deducted on federal income tax returns will take effect in 2026 under President Donald Trump’s recently enacted tax and spending package.

For non-itemizers, the rules will allow more deductions. Starting in 2026, taxpayers who take the standard deduction will be able to claim up to $1,000 in cash gifts to qualified charities ($2,000 for joint filers). This deduction only applies to direct cash gifts to 501(c)(3) organizations, not to donor-advised funds or private foundations.

For itemizers, a new rule will limit deductions. Charitable cash contributions will only be deductible to the extent that they exceed 0.5% of adjusted gross income. For example, with an adjusted gross income of $100,000, the first $500 of cash donations will no longer be deductible. Contributions beyond that amount remain subject to the existing 60% AGI cap for public charities and 30% for donor-advised funds or private foundations. Any excess donations can still be carried forward for up to five years.

High-income earners will also see a change. For taxpayers in the top 37% bracket, deductions will be calculated as if they were in the 35% bracket, reducing the overall tax benefit.

Additionally, non-cash contributions such as clothing or household goods will be subject to the same 0.5% AGI floor for itemizers, while non-itemizers will not be able to deduct them at all.

These new provisions mark a shift in tax policy aimed at limiting the value of deductions while slightly expanding options for non-itemizers.

Credit: CNN Newsource

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