The last time the US tax laws underwent a major update was through the Tax Cuts and Jobs Act (TCJA) passed in 2017 during President Trump’s first term. TCJA significantly increased the amount of taxpayers’ standard deduction. This increase affected people’s charitable giving behaviors, and many research suggests that it reduced the number of people who donate or at least who itemize donations.
Shortly after President Trump’s second term began in late January 2025, the Congress passed a major piece of legislation that is widely known as “One Big Beautiful Bill Act (OBBBA) in this past July. Once again, some sections of the bill may have major impact on individuals’ charitable giving.
Beginning in 2026, taxpayers who itemize can deduct their charitable contributions only if their aggregate contributions exceed 0.5% of their Adjusted Gross Income (AGI). The AGI will be computed without regard for the charitable deduction. The new law also sets an ordering rule specifying which types of charitable contributions are reduced first by that floor. Based on this new rule, we strongly recommend taxpayers review the ordering rules to evaluate if their aggregate contributions will exceed the 0.5% floor.
For charitable inclined non-itemizers, they used to not be able to deduct their charitable contributions if their itemized deductions couldn’t exceed the amount of their standard deduction. The good news is effective in 2026 tax payers can deduct their charitable contributions up to $1,000 for single filers and $2,000 for married filing jointly even if they don’t itemize. Taxpayers may claim this deduction regardless of their income level or other deductions. And this deduction is not subject to the new 0.5% of AGI floor for itemized deductions of charitable contributions. But there is a catch. Donations to 509(a)(3) organizations and/or Donor Advised Fund contributions don’t count.
If you are charitably inclined, you may need to re-evaluate your giving strategies in light of these changes related to individuals’ charitable contribution before the end of 2025. Depending on your situation, you may want to make larger charitable contributions this year to avoid the 0.5% floor effective in 2026. If you don’t itemize, but need to reduce your taxable income, you may consider this new charitable deduction limit of $2,000 for married couples filing jointly in the 2026 tax year. Tax planning can make your charitable giving more efficient, but it shouldn’t determine your values or priorities. Don’t let the tax “tail” wag your philanthropy “dog”—let your mission and impact lead, and use tax strategy to support that purpose.