This is the first year-end giving season under the charitable deduction changes in the One Big Beautiful Bill Act, and the questions we are getting from donors and development directors tend to fall into the same few categories. Some donors will get a tax benefit they haven’t had since 2021. Others will find their deduction is smaller than last year’s even though they gave the same amount. Below is a summary of what changed for 2026, who it affects, and what to consider before December 31.
The New Deduction for Non-Itemizers
When the 2017 tax law nearly doubled the standard deduction, most households stopped itemizing, and most lost any federal tax benefit for their charitable gifts. Starting in 2026, taxpayers who take the standard deduction can also deduct up to $1,000 in cash gifts to charity, or $2,000 for married couples filing jointly. The limits are not indexed for inflation, and unused amounts do not carry forward.
The deduction is narrower than the headlines suggest. It does not apply to:
- Gifts to donor-advised funds
- Gifts to supporting organizations
- Gifts to most private foundations
- Gifts of stock, clothing, or other property
A married couple who takes the standard deduction and writes a $2,000 check to their local food bank gets a $2,000 deduction. The same couple writing the same check to their donor-advised fund gets nothing under this provision. Charities that promote DAF giving in year-end appeals should keep that distinction in mind, since many smaller donors will be claiming this deduction for the first time.
The 0.5% Floor for Itemizers
For donors who itemize, charitable contributions are now deductible only to the extent they exceed 0.5% of adjusted gross income. A married couple with $400,000 of AGI who gives $5,000 to charity loses the first $2,000 to the floor and deducts $3,000.
The part donors tend to miss is that the disallowed amount is generally gone. It does not carry forward to future years unless the donor’s giving also exceeds the regular percentage-of-AGI limits that year. If a donor’s deduction looks smaller than last year’s and the gift amount didn’t change, the floor is the likely reason.
Bunching Makes More Sense Now
The floor applies once per year, so concentrating several years of giving into one year means the donor loses the floor once instead of every year. Take the couple above. If they give $15,000 in 2026 and nothing in 2027 or 2028, they lose $2,000 to the floor once, rather than $2,000 each year for a total of $6,000. A donor-advised fund works well for this, since the donor gets the deduction in the year of the contribution and can still make grants to charities on the usual schedule. That donor won’t benefit from the non-itemizer deduction in the off years, though, because DAF contributions don’t qualify.
Top-Bracket and Corporate Donors
Donors in the 37% bracket now have their itemized deductions reduced so that each deducted dollar saves no more than about 35 cents. Corporations face a new floor of their own. Charitable contributions are deductible only to the extent they exceed 1% of taxable income, and the existing 10% ceiling still applies. For most corporate donors the effect is marginal, but companies that give a small, steady amount each year may find some or all of it no longer deductible.
A Note for Arizona Donors
Arizona’s charitable tax credits have not changed with the federal law. For 2026, a gift to a Qualifying Charitable Organization can generate a dollar-for-dollar state credit of up to $506 for single filers and $1,009 for married couples filing jointly. Gifts made through April 15, 2027 can be claimed on the 2026 return. Donors should remember that a gift claimed as a state credit generally cannot also be claimed as a federal deduction. That includes the new non-itemizer deduction.
What Hasn’t Changed
The substantiation rules are the same as before:
- Any single gift of $250 or more still requires a contemporaneous written acknowledgment from the charity.
- Charities must still provide a written disclosure for quid pro quo contributions over $75, such as gala tickets or auction purchases.
Donors should keep their acknowledgment letters with their tax records, and charities should make sure year-end receipts go out on time.
None of these changes are a reason to give less. They are a reason to think about how and when to give. For some donors that means writing checks directly to charities instead of routing them through a DAF. For others it means bunching several years of gifts into one.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form. This post is for general informational purposes and does not constitute legal advice.