Changes to Charitable Deductions Under Trump’s Tax Reforms
President Donald Trump’s “Big Beautiful Bill” has introduced substantial tax credits that are designed to help wealthy Americans. However, since 2026, some individuals have observed a decline in their charitable gift deductions, according to experts.
To claim charitable deductions, one must itemize them based on the type of revenue and assets donated. Recent modifications to Trump’s tax law, specifically the Expense package, have added two significant alterations to how deductions work.
Starting in 2026, there will be a minimum threshold for itemized charitable deductions, only eligible if they surpass 0.5% of the adjusted gross income. Additionally, those in the top income tax bracket of 37% will face limitations on their charitable deductions moving forward.
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These adjustments require planning ahead for 2025, yet, as Edward Justrem, chief planning officer for Heritage Financial Services, notes, more favorable charitable deductions remain accessible.
For instance, some clients might think about consolidating several years of donations in 2025 through donor-advised funds. This method allows them to make tax-deductible contributions upfront while serving as a charitable checkbook for future gifts.
Additionally, Trump’s updated law introduces a new tax credit for cash donations starting in 2026. This credit is capped at $1,000 for single filers and $2,000 for married couples filing jointly. Justrem suggests that for donations in 2025 that aren’t urgent, one could benefit by delaying the gift until January.
Simplifying Tax Reductions
Justin Miller, a partner and national director of wealth planning at Evercore Wealth Management, emphasizes the importance of these changes for high-income earners.
For example, if someone has an adjusted gross income of $1 million and donates $100,000 to a charity in 2025, their deduction could save them approximately $37,000. In a recent LinkedIn post, he highlighted this scenario.
In contrast, under the new provisions established by Trump’s tax law in 2026, the same $100,000 donation could yield only $33,250 in benefits.
Here’s a breakdown: the 0.5% threshold would reduce the eligible gift amount from $100,000 to $95,000, and then further adjustments would trim the donation to about $89,864. This reduction results in a deduction of roughly $33,250, factoring in the 37% tax rate.
Miller observes, “Many people care about even small savings, like the $3,750 in this case,” reflecting how tax benefits can appeal to those making significant incomes.
He also advises utilizing donor-advised funds in 2025 to frontload several years of charitable contributions, which many high-income earners are already doing to maximize their benefits before year-end.
