2026: Key Tax Change Information

For the first time in years, taxpayers who do not itemize will be able to claim a small deduction for cash charitable gifts.

Starting in 2026:

• Up to $1,000 deduction for single filers

• Up to $2,000 for married couples filing jointly

• Cash gifts only

• Not eligible: donor-advised funds (DAFs) or private non-operating foundations

This deduction is not indexed for inflation, so its value may decrease over time, but it still provides a modest incentive for non-itemizers to support nonprofits.

Taxpayers who itemize will be subject to a new limitation:

Only the portion of charitable gifts that exceeds 0.5% of adjusted gross income (AGI) will be deductible.

Example:
A donor with $300,000 AGI would need to give more than $1,500 before the deduction begins.

This rule may make it less beneficial to give smaller amounts spread throughout the year—and more advantageous to “bunch” giving into one tax year.

For donors in the highest marginal tax bracket (currently 37%), the tax benefit of each deductible dollar will be capped at:

35 cents per dollar donated

This decreases the value of charitable deductions for high-income givers and may influence the size or timing of gifts.

The OBBBA makes several existing provisions permanent:

• The 60% AGI limit for cash gifts to public charities

• For corporations: only contributions above 1% of taxable income are deductible

• The increased standard deduction remains in place, meaning fewer households will itemize and claim traditional charitable deductions

These changes may shift donor behavior toward larger, less frequent gifts and/or strategic use of donor-advised funds.

Many donors may benefit from adjusting how and when they give.

Consider:

• Bunching several years of gifts into one tax year

• Pre-funding a donor-advised fund before 2026

• Accelerating 2025 giving to take advantage of current rules

• Reviewing whether you will itemize once the new thresholds take effect

A financial or tax advisor can help you determine which strategies best align with your goals.

For donors 70½ or older, QCDs remain one of the most tax-advantageous ways to give—and they are not affected by the new itemized deduction rules.

2026 QCD Key Facts

• Annual limit increases to $111,000 (up from $108,000)

• Must be transferred directly from an IRA

• Not eligible: DAFs or private foundations

• QCDs reduce taxable income and can satisfy your Required Minimum Distribution (RMD)

• They occur before itemized deductions are calculated—so floors and caps do not apply

This makes QCDs especially valuable in the new tax landscape.

The OBBBA also includes:

• An increased estate and gift tax exemption, which may influence legacy or planned giving

• Changes to the excise tax on university endowments, which may impact donor interest in certain institutions