Individuals contributing to tax-exempt charities or nonprofits need to pay attention to upcoming changes that will affect the deductibility of their donations.
Recent adjustments in the federal tax and spending legislation signed by President Donald Trump will have implications for those claiming standard deductions and those who itemize their deductions—essentially when the total of itemized deductions surpasses the standard amount.
Here’s a brief overview of significant modifications set to take effect in 2026.
During the early stages of the pandemic, if you claimed the standard deduction, you could deduct an extra $300 for charitable cash donations, or $600 for married couples filing jointly. However, this provision has since been revoked.
Starting in 2026, though, taxpayers will be able to deduct cash contributions up to $1,000 ($2,000 for joint filers).
“This applies strictly to direct cash donations to qualified 501(c)(3) charities, not to funds or private foundations,” noted Tom Osaben, who oversees tax content and government relations for the National Association of Tax Professionals.
From 2026 onward, those who itemize will get to deduct for the first time. Specifically, it’s over 0.5% of adjusted gross income (AGI).
For example, if your adjusted gross income is $100,000, the deductible amount will be calculated based on that 0.5%. So, say you contribute $2,000; you would only be able to claim a $1,500 deduction.
Existing rules restricting itemized deductions will remain intact. Specifically, contributions to public charities will still be capped—no part of your cash donations exceeding 60% of your AGI can be deducted in the year they were made, as O’Saben explained. It’s generally around 30% for donors with private foundations.
However, there’s a possibility to carry forward cash donations that exceed the allowable limits for the next tax year. Thanks to another rule, you can “over-contribute” for five years and deduct on future returns. This “excess” includes any cash donation that exceeds the AGI ceiling, and will fall under the new 0.5% floor starting next year.
For instance, if next year your AGI is again at $100,000, not only can you claim the first $500 (0.5% x $100,000) of your cash gift, but you can also exceed the limit on the remaining amount up to $60,000 (60% of AGI).
Ultimately, there are some deductions reserved for specific situations, as O’Saben mentioned.
Interestingly, for those in the highest tax bracket of 37%, the deduction value is weighed as if they were in the 35% bracket.
To clarify how this works: After considering the new 0.5% AGI stipulations, if you can itemize and plan to deduct a cash donation of $10,000, typical itemized deductions would lower that taxable amount by the relevant tax rate multiplied by the donation.
So, if you’re in that 37% tax bracket, you might expect $3,700 (37% of $10,000) in tax savings. Yet, this actually reduces your tax liability to $3,500 (35% of $10,000), according to O’Saben.
Additionally, when it comes to itemizing, non-cash donations like clothing, food, and household items will also qualify for the new 0.5% AGI threshold.
But for those taking the standard deduction, non-cash contributions won’t be deductible, as that $1,000/$2,000 limit is strictly for cash gifts.
