Beginning with the 2026 tax year, several important changes will affect the way taxpayers deduct charitable contributions:
- Above-the-Line Deduction for Non-Itemizers
- Taxpayers who do not itemize will be allowed a new “above-the-line” charitable deduction of up to $1,000 (single) or $2,000 (married filing jointly). The contribution must be made in cash to a public charity (not a donor-advised fund). This deduction is in addition to the higher standard deduction amounts of $31,500 (MFJ) and $15,750 (single).
- 0.5% AGI Floor for Itemizers
- Taxpayers who itemize will only be able to deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI).
- Example: With an AGI of $500,000, only charitable donations above $2,500 are deductible.
Historically, charitable deductions have been limited by a percentage ceiling; now there is also a floor. While the percentage is small, this change will most significantly affect high-income donors.
- Example: With an AGI of $500,000, only charitable donations above $2,500 are deductible.
- Taxpayers who itemize will only be able to deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI).
- 3. Reduced Deduction for High-Income Taxpayers
- Taxpayers in the 37% tax bracket will see their charitable deduction limited to 35%. In other words, the tax savings are capped at $0.35 for every $1.00 donated (a “2/37 haircut”). This cap replaces the “Pease Limitations,” which were otherwise set to return in 2026.
Planning Tip: With these changes taking effect in 2026, 2025 is an excellent year to make charitable contributions. In future years, taxpayers may also benefit from “bunching” deductions—grouping contributions into certain years to maximize tax savings.
Charles H. Livsey
moc.nqr@yesvilc
Mr. Livsey is a member of the firm’s Tax and Estate Planning Section. Mr. Livsey’s legal practice includes estate and trust administration, estate and gift planning, and probate administration and taxation, with a focus on Split Interest Trusts, Family Limited Liability Companies, Private Foundations, and Charitable Foundations. He is a Fellow of the American College of Trust and Estate Counsel (ACTEC). Mr. Livsey also has considerable experience in Real Estate Land Use Planning.