New Charitable Giving Tax Rules Coming in 2026
As we approach the end of the year, many people plan to donate to their favorite charities by December 31. However, major tax changes set to take effect in 2025 could alter how individuals think about their charitable donations.
This year, some unusual tax rules might prompt certain taxpayers to consider giving more in 2025, while others may find it advantageous to delay their contributions until January.
It turns out, the recent One Big Beautiful Bill Act, signed into law on July 4 by former President Donald Trump, complicates matters a bit.
Considering Two Charitable Giving Scenarios
When it comes to charitable giving in 2025, there are essentially two paths: itemizing deductions, which most taxpayers choose, or opting for the standard deduction. Starting in 2026, a new deduction will be available for taxpayers who claim the standard deduction—allowing them to deduct cash donations to qualified charities without having to itemize. This could be a game changer.
The new deduction will be limited to $1,000 for single filers and $2,000 for married couples filing jointly. However, experts note that these amounts won’t automatically adjust for inflation.
According to tax expert Tom Oseven, “This deduction pertains only to cash donations to qualified charities, excluding donor-advised funds and other support organizations.” It’s essential to keep in mind that this deduction won’t apply to your 2025 tax return. Hence, some tax planners suggest that those planning to use the standard deduction might benefit from waiting until 2026 to donate.
George Smith, a CPA from Bloomfield Hills, mentioned that for individuals who don’t itemize deductions, the new $1,000 and $2,000 limits for non-itemizers starting in 2026 are significant.
Contributions can be made through cash, credit cards, or checks, but it’s important to note that cryptocurrencies like Bitcoin won’t qualify as “cash” for this deduction. They’re treated as non-cash property donations, which have different tax implications. Additionally, donations of physical goods like clothing don’t meet the criteria for this new deduction either.
For your 2025 federal return, charitable contributions are only tax-deductible if you itemize them. So, if you claim the standard deduction and donate in 2025, you won’t gain any tax benefit from that contribution.
If you wait a few weeks, you might save on taxes. For instance, a single taxpayer at a 22% rate who donates $1,000 in 2026 could save $220. For married couples, contributing $2,000 could result in a $440 deduction.
Since about 90% of individual taxpayers usually opt for the standard deduction and don’t itemize, this new rule presents a considerable shift for many.
Taxpayers need to keep thorough records. Also, for cash donations exceeding $250, a written acknowledgment from the charity is necessary to prove that no goods or services were received in return.
Some financial advisors suggest that “January is the new December” for standard deduction taxpayers. For example, if a single individual typically gives $500 each December, they could simply write a check for that amount in January and another $500 in December 2026 to maximize their deduction.
Itemizers’ Strategies for Charitable Donations
For those who plan to itemize deductions for their 2025 tax return, it’s crucial to be aware of the new rules coming in 2026. From then on, only total charitable contributions surpassing 0.5% of adjusted gross income will be deductible for itemizers. This means if your AGI is $100,000, the first $500 of donations will not count, and you can only deduct amounts exceeding that threshold.
Tax strategies may need to adjust as many individuals may want to donate before the new caps and limits on charitable deductions become effective in 2026. The Tax Foundation suggests that taxpayers may want to front-load their donations this year to optimize tax benefits.
The new restrictions will also mean that individual taxpayers can deduct cash contributions only up to 60% of their adjusted gross income annually, in addition to other limitations. Essentially, taxpayers will need to choose between itemizing or taking the standard deduction; they cannot utilize both in the same tax year.
Exciting changes from the One Big Beautiful Bill Act will take effect when filing 2025 returns, including deductions for certain overtime pay and other income adjustments. As 2025 draws to a close, it’s a wise move to evaluate the best charitable giving approach for your situation.
