2026 OBBBA Charitable Contributions

December is a crucial month for nonprofits, as it is generally estimated that about 30% of annual charitable donations occur during this one month. “Giving Tuesday” campaigns and reminders of the tax incentives for giving to qualified charitable organizations entice donations during the last month of the year.

When the standard deduction was significantly increased by the Tax Cuts and Jobs Act in 2017 resulting in a significant decrease in taxpayers itemizing their deductions, the overall giving levels declined substantially. However, beginning in the 2026 tax year, the One Big Beautiful Bill Act is making permanent a charitable deduction for non-itemizers.

The deduction, reinstated from the Covid-19 pandemic, has a higher limit than before of up to $1,000 for single-filer taxpayers, and $2,000 for married couples filing jointly. The new incentive is estimated to generate meaningful additional giving over the next decade. This exclusively cash (check) deduction will still follow the charitable deduction rules set forth by the IRS, such as contributions of $250 or more must have a contemporaneous written acknowledgement from the qualified organization to support the deduction. It is important to note this deduction is not indexed for future inflation, so it is not expected to increase in the future. Also, certain types of donations are ineligible for the deduction, such as contributions to donor-advised funds or private non-operating foundations.

For itemizers, a new floor of 0.5% of Adjusted Gross Income will begin in 2026. This means the amount of your charitable contributions that exceed this threshold will be tax deductible.

Also in 2026, there is new legislation that caps the tax benefits of itemized charitable deductions at 35%, even for those top tier taxpayers in the highest marginal tax bracket of 37%. This means donors in the top tier bracket will receive less benefit from their donations. Top tier donors considering significant gifting may want to consider making the contribution in 2025 to utilize their current marginal rate, if it suits their tax plan.

For nighttime reading, may I suggest IRS Publication 526, Charitable Contributions. This publication states other than “conditional” contributions that may be “undone” at a later date, the deduction is considered delivered on the date it is mailed or in the case of a stock certificate, the date it is properly endorsed. However, it is suggested the charitable organization receive it in the year it is to be deducted to eliminate confusion on the acknowledgement letter date.

- Pamela Smitson, CPA, CGMA®, Reify Wealth Advisors

This article was included in the Reify Wealth Advisors Quarterly Newsletter.