New Charitable Contribution Rules Affect Tax Deductions Starting 2026

Changes to the rules governing charitable contributions will come into effect in 2026, impacting how much individuals can deduct from their taxes. These modifications, part of a broader tax reform package enacted during President Donald Trump‘s administration, will affect both standard deduction filers and those who itemize their deductions.

For individuals who regularly donate to tax-exempt charities, the modifications introduce both new limits and opportunities. Starting in 2026, non-itemizers will be allowed to deduct cash donations up to $1,000 for individuals and $2,000 for married couples filing jointly. This change marks a significant increase from the previous allowance of $300 for individuals and $600 for couples that was in place during the first two years of the pandemic, which has since expired. According to Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals, this deduction applies strictly to direct cash gifts made to qualifying 501(c)(3) charities, excluding donor-advised funds or private foundations.

New Limits for Itemizers and Non-Cash Donations

For those who choose to itemize their deductions, the rules will change in a different way. Starting in 2026, cash contributions will only be deductible to the extent that they exceed 0.5% of a taxpayer’s adjusted gross income (AGI). For example, if a taxpayer has an AGI of $100,000, they will only be able to deduct contributions exceeding $500. If their total cash donations for the year amount to $2,000, they would only be able to claim a deduction of $1,500.

In addition, an existing limit will remain in place, capping cash contributions to public charities at 60% of one’s AGI for the year. If taxpayers exceed this limit, they can carry forward the excess contributions for up to five years to offset future tax liabilities, according to O’Saben. However, he emphasized that taxpayers cannot take advantage of both the new cash deduction and the itemized deduction simultaneously.

Non-cash donations, such as clothing or food contributions, will also be subject to the new 0.5% of AGI floor for itemizers. For those taking the standard deduction, non-cash contributions will not be deductible, as the new limits apply solely to cash gifts.

Impact on High-Income Filers

Furthermore, changes will also impact high-income earners. Taxpayers in the top tax bracket of 37% will see their deductions treated as if they were in the 35% tax bracket. For instance, if an individual is allowed to deduct $10,000 in cash donations, the maximum tax savings they could realize would drop from $3,700 (based on the 37% tax rate) to $3,500 (using the 35% rate). This modification effectively reduces the financial benefit of charitable contributions for those in the highest income bracket.

These changes reflect an evolving landscape in tax policy, underscoring the importance for taxpayers to stay informed about how their charitable giving may be affected in the coming years. As individuals plan their contributions, understanding these new rules will be essential for maximizing tax benefits while supporting their chosen causes.