Changes to Charitable Giving in the One Big Beautiful Bill

Changes to Charitable Contributions in 2026

When the One Big Beautiful Bill was signed into law in 2025, some changes were delayed until 2026. Charitable contributions are one of those changes. We will spend some time discussing the changes and then discuss some strategies to use charitable contributions to reduce your taxes. 

New deduction for taxpayers who take the standard deduction

In 2025, you could only deduct charitable contributions if you itemized deductions on your tax return. Starting in 2026, you now have a choice. You can deduct up to $1,000 ($2,000 if filing jointly) of your cash contributions to qualified organizations, or you can continue to include charitable donations (cash and property) in your itemized deductions.  

Changes for taxpayers who itemize deductions

If you itemize your charitable giving, there are some changes beginning in 2026 you should be aware of. Going forward, there is a 0.5% AGI floor for all charitable contributions. For example, if you donate $10,000 in cash and your AGI is $100,000. Your charitable floor (0.5% of AGI) is $500. With a $10,000 donation, only $9,500 is deductible on your Schedule A. Income limitations and carryforward rules for charitable contributions are unchanged.

Example: Applying the 0.5% AGI floor

• Adjusted gross income (AGI): $100,000

• 0.5% AGI floor: $500 

• Total charitable donations: $10,000

• Deductible charitable donations: $9,500

Documentation requirements

Regardless of whether you choose to itemize or not, the IRS requires proof of payment. For contributions equal to and greater than $250, the IRS requires you to maintain written acknowledgement of the donation from the organization. For donations less than $250, a written acknowledgement or bank record is necessary. 

Strategies for Charitable Giving

If you normally take the standard deduction, keep track of donations you make throughout the year. Track your donations and save your emailed receipts. If you give cash, ask for receipt or write a check. 

If you normally itemize, then you might want to consider bunching donations. Bunching means making larger donations in alternate years. 

Bunching example

Scenario	Year 1	Year 2	Total deductible donations
Without bunching	AGI: $100,000 0.5% floor: $500 Donation: $10,000 Deductible donation: $9,500	AGI: $100,000 0.5% floor: $500 Donation: $10,000 Deductible donation: $9,500	$19,000
With bunching	Take standard deduction and $2,000 above-the-line charitable contribution deduction.	AGI: $100,000 0.5% floor: $500 Donation: $18,000 Deductible donation: $17,500	$19,500

Bunching results in an additional $500 in deductible contributions because concentrating donations in one year limits the AGI floor to that year only.

Qualified Charitable Distributions

If you are over 70 ½, a qualified charitable distribution (QCD) offers the greatest tax advantages. A QCD from your traditional IRA is not treated as taxable income and counts towards your required minimum distribution (RMD). There are multiple benefits to setting up a QCD which you can read about here.

Conclusion

Charitable giving can make the world a better place and give you tax savings at the same time. Starting in 2026, you can benefit from cash donations regardless of whether you take the standard deduction or itemize your deductions. Start tracking your charitable giving now, so you can take full advantage of these deductions when we are preparing your taxes.

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