Charitable Contribution Tax Rules Change: What You Need to Know NOW
URGENT UPDATE: New tax rules regarding charitable contributions are set to take effect in 2026, impacting millions of taxpayers who donate to non-profits and charities. These changes will significantly alter how much you can deduct, especially for those who take the standard deduction versus itemizers.
Starting in 2026, individuals who do not itemize their deductions will see a boost. Taxpayers will be allowed to deduct up to $1,000 in cash donations to qualified 501(c)(3) charities—double the previous limit of $300 for individuals and $600 for married couples filing jointly. This change aims to encourage more charitable giving, especially after the pandemic years.
However, for those who itemize deductions, the landscape is changing dramatically. For the first time, itemizers will only be able to deduct cash contributions that exceed 0.5% of their adjusted gross income (AGI). For example, if your AGI is $100,000, you can only deduct contributions over $500. Therefore, if you donate $2,000, you will only be able to deduct $1,500.
Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals, noted, “This applies only to direct cash gifts to qualifying charities—not donor-advised funds or private foundations.”
Furthermore, there are existing limits on how much can be deducted from contributions to public charities. Taxpayers cannot deduct more than 60% of their AGI in a given year. Itemizers will also be able to carry forward excess contributions for up to five years, allowing future deductions for amounts that exceed the new thresholds.
In an additional change, taxpayers in the top 37% tax bracket will face a new cap on deduction values. Deductions will be treated as if they were in the 35% bracket, meaning if you typically would save $3,700 on $10,000 in donations, it will now only save you $3,500. This cap could substantially increase tax liabilities for high-income earners.
Moreover, non-cash contributions—such as clothing and food—will also be subject to the new 0.5% AGI rule for itemizers. Those taking the standard deduction won’t benefit from any deductions for non-cash gifts since the new limits apply only to cash donations.
As these changes roll out, taxpayers are urged to review their contribution strategies and consult with tax professionals to maximize their benefits under the new rules. These updates may significantly affect your tax bill and your ability to support the causes you care about.
Stay tuned for further updates as the tax landscape continues to evolve. Share this information to help others prepare for these significant changes in tax regulations!
