Charitable Giving Gets a Makeover: What High-Income Taxpayers & Non-Itemizers Need to Know for 2026
The landscape of charitable giving is shifting—again. With the passage of the One Big Beautiful Bill Act (OBBBA), taxpayers will face new rules that reshape how charitable contributions are treated for tax purposes. These changes, effective for tax years beginning after 2025, are permanent and carry significant implications for both high-income donors and everyday givers.
Here’s what you need to know and how to plan ahead.
For Non-Itemizers: A Welcome Return of the Above-the-Line Deduction
For the first time since 2021, taxpayers who take the standard deduction will be able to claim a charitable giving benefit. Starting in 2026:
Single filers can deduct up to $1,000 in cash donations.
Married couples filing jointly can deduct up to $2,000
This above-the-line deduction applies only to cash gifts made directly to qualified public charities—not donor-advised funds or private foundations. While modest, this change opens the door for broader participation in charitable giving, especially among the roughly 90% of taxpayers who don’t itemize
For Itemizers: A New 0.5% AGI Floor and Deduction Cap
High-income taxpayers who itemize will face two new limitations:
0.5% AGI Floor: Charitable contributions must exceed 0.5% of adjusted gross income (AGI) to be deductible. For example, a taxpayer with $400,000 AGI must donate more than $2,000 before any deduction kicks in
Deduction Cap for Top Bracket: Taxpayers in the 37% bracket will see their charitable deduction benefit capped at 35%. That means a $10,000 donation yields a $3,500 deduction—not $3,700
These changes modestly reduce the tax incentive for large-scale giving, particularly for high-net-worth individuals. However, they also encourage more strategic planning and may shift the timing and structure of donations.
Strategic Giving: Why QCDs Are More Valuable Than Ever
For taxpayers aged 70½ or older, Qualified Charitable Distributions (QCDs) from IRAs remain a powerful tool. QCDs:
Count toward required minimum distributions (RMDs)
Are excluded from taxable income
Bypass the 0.5% AGI floor and deduction cap
This makes QCDs especially attractive for high-income retirees who want to support charities while minimizing their tax liability.
Key Takeaways for Taxpayers and Advisors
Broader Giving Incentives: The new above-the-line deduction encourages charitable participation among non-itemizers.
Reduced Incentives for Large Donors: High-income itemizers will see slightly diminished tax benefits, prompting a need for strategic planning.
Permanent Changes: These updates are not temporary—they’re here to stay, starting in 2026.
2025 Is a Planning Year: Consider accelerating charitable contributions before the new rules take effect to maximize deductions under current law.
Final Thoughts
The OBBBA introduces a more inclusive, albeit more complex, framework for charitable giving. Need help navigating these changes? Our team is here to guide you through the evolving tax landscape and ensure your giving strategy aligns with your financial goals.
