Upcoming Changes to Charitable Giving Deductions
Many people often try to make donations to their preferred charities by December 31st as part of their year-end generosity. However, significant tax changes are poised to shift that in 2025.
This year, some strange new rules might push certain taxpayers to contribute more than they initially planned for 2025, while others may find it more beneficial to delay their donations until January.
When it comes to the new stipulations of the One Big Beautiful Bill Act, signed by President Donald Trump on July 4th, nothing is straightforward.
Understanding Tax Scenarios for Charitable Giving
We’re looking at two tax scenarios for charitable contributions in 2025. Ultimately, you either itemize your deductions as many do or claim the standard deduction.
Starting in 2026, taxpayers using the standard deduction may be able to write off cash contributions to qualifying charities, without needing to itemize. This deduction could be up to $1,000 for single filers and $2,000 for married couples filing jointly. Experts noted there won’t be adjustments for inflation on these amounts.
According to Tom Oseven, a registered agent with the National Association of Tax Professionals, this new deduction focuses solely on cash donations, excluding donor-advised funds and certain support groups.
However, keep in mind that this tax relief won’t apply to your 2025 return. This insight has led some tax strategists to advise individuals taking the standard deduction to hold off on charity checks until 2026.
George Smith, a CPA, emphasized that those not itemizing should acknowledge the new deductions coming in 2026. Donors can make contributions via cash, check, or credit card and claim the deduction for those donations.
Interestingly, Elizabeth Young, a tax and ethics director, remarked that cryptocurrencies like Bitcoin won’t count as “cash” for this deduction, treating such donations as non-cash property instead.
Non-cash gifts, including items like clothing, also won’t qualify for the new tax deduction for non-itemizers. In fact, if you claim the standard deduction in 2025 and donate then, you won’t receive any tax benefit for those contributions.
You might even find it more beneficial to hold off on donations for a few weeks. For instance, if you are single and donate $1,000 in 2026, you could save $220 at a 22% tax rate. And for a married couple donating $2,000, it could be a $440 deduction.
Since around 90% of individual taxpayers utilize the standard deduction rather than itemizing, this is a significant alteration for a lot of people.
Taxpayers need to keep thorough records, especially for donations exceeding $250, as written confirmation from the charity will be necessary to confirm that no goods or services were received in exchange.
Advisors suggest that January might be the new December for those who don’t itemize. A scenario could be a single individual who usually donates $500 each December only needs to contribute $500 in January for the 2026 tax break. That way, they would maximize their deduction come filing time.
Itemizing Charitable Contributions
For those who plan to itemize, it’s critical to understand that starting next year there will be a new threshold for charitable contributions on your income tax return. Beginning in 2026, only contributions exceeding 0.5% of your adjusted gross income will be deductible, exclusively for those itemizing their deductions.
The Tax Foundation recommends some taxpayers strategize by advancing their donations to 2025 to circumvent new caps and limitations on itemized deductions that will kick in the following year.
Expect adjustments in Schedule A for 2026 tax filings, which will outline these changes. For example, if your adjusted gross income is $100,000, your first $500 in donations won’t be deductible. Contributions above that can be deducted based on typical AGI limits.
As for cash contributions, starting in 2026, itemizers can only deduct cash gifts up to 60% of their adjusted gross income annually, adhering to existing restrictions.
Remember, you have to choose one route: itemizing or standard deduction. You can’t mix the two in a single year. The One Big Beautiful Bill Act will also introduce various tax benefits such as deductions for certain overtime, tips, auto loan interest, and additional deductions for seniors.
While the landscape for charitable giving may shift in 2026, it’s wise to evaluate your strategy for 2025 now and figure out what will work best for your charity contributions this year.
