By: Cherish van Mullem, CPA, JD, LLM
The One Big Beautiful Bill (OBBBA) preserved one familiar charitable giving rule, but quietly changed several others in ways that make timing more important than ever.
While OBBBA extended the provision allowing taxpayers to deduct cash contributions to public charities of up to 60% of their contribution base (modified adjusted gross income (AGI)), it also introduced new deductions and new limitations that donors should understand before writing a check.
A Win for Non-Itemizers, Starting this year (2026)
One of the most taxpayer-friendly changes is a new permanent charitable deduction for non-itemizers.
Beginning in 2026, taxpayers who claim the standard deduction may deduct:
- $1,000 for single filers, or
- $2,000 for married couples filing jointly
for cash contributions made to public charitiesÂ
This provision reinstates and builds on the temporary COVID-era deduction that allowed non-itemizers to deduct $300 ($600 MFJ) of cash charitable gifts. OBBBA not only increases the amount but makes the deduction permanent.
Bottom line: If you typically take the standard deduction, charitable contributions made throughout 2026 will finally produce a tax benefit again.
New Limits for Itemizers: A Deduction Floor
For taxpayers who itemize, the news is more mixed.
OBBBA retained the familiar rule allowing cash charitable deductions of up to 60% of a taxpayer’s contribution base. However, beginning in 2026, a new deduction floor applies:
- Only charitable contributions exceeding 0.5% of your contribution base will be deductible.
For example, a taxpayer with a $1,000,000 contribution base will not receive any deduction for the first $5,000 of charitable contributions. Only amounts above that threshold will count.
Additionally, other limitations, such as alternative minimum tax revisions, may further reduce overall itemized deductions, making charitable giving less tax-efficient for some higher-income taxpayers.
Planning Opportunity: Give Now, Deduct Now
If you expect to itemize deductions and plan to make charitable gifts throughout 2026 and beyond, it may make sense to accelerate those future contributions into the current 2026 tax year. This strategy helps ensure your total itemized deductions exceed the standard deduction and any applicable adjusted gross income (AGI) floors.
Not sure who you want to support yet? A donor-advised fund (DAF) remains an essential tool in this new landscape. By establishing and funding a DAF in 2026, you can:
- “Bunch” Your Giving: Combine multiple years of planned donations into a single high-giving year (2026) to easily clear the standard deduction threshold (0.5%) and any deduction floors.
- Claim the Deduction Immediately: Secure a tax deduction for the full amount contributed to the DAF during the 2026 tax year, even if the money isn’t distributed to charities until later.
- Maintain Flexibility: Recommend grants to your favorite nonprofits at your own pace over the coming years, while the assets in the DAF potentially grow tax-free.
The Takeaway
- If you itemize deductions: Only contributions that exceed 0.5% of your Adjusted Gross Income (AGI) are now deductible. Consider “bunching” your 2026 and 2027 gifts into this year to ensure you clear that floor and maximize your tax savings.
- If you take the standard deduction: You can now take advantage of the Universal Charitable Deduction. You are eligible to deduct up to $1,000 ($2,000 for married couples) for cash gifts made directly to qualified charities, even without itemizing.
- Note: Direct gifts to DAFs do not qualify for this specific “above-the-line” deduction.
As always, charitable giving should reflect your personal values first, but smart tax planning can help ensure your generosity goes further.
