If you regularly donate to tax-exempt charities or nonprofits, it’s important to know that there are upcoming changes to the rules about how much you can deduct from your contributions.
Recently, several adjustments were made in President Donald Trump’s federal tax reform package, affecting those who take the standard deduction as well as those who itemize. Itemizing is when individual deductions exceed the standard deduction, which can impact your tax situation quite a bit.
Here are some key changes that will take place in 2026.
Increased Cash Contribution Deductions for Non-itemizers
During the initial two years of the pandemic, if you took the standard deduction, you could add an extra $300 ($600 for married couples filing jointly) for cash donations to charities. Those provisions have since lapsed.
Starting in 2026, however, you’ll be able to deduct cash donations up to $1,000 ($2,000 for joint filers).
This new rule applies specifically to direct cash gifts made to qualifying 501(c)(3) charities and doesn’t include donations made to donor-advised funds or private foundations, as noted by Tom Osaben, director of tax content and government relations at the National Association of Tax Professionals.
New Limit on Itemizable Deductions
From 2026 onward, those who itemize will only be able to deduct cash contributions that exceed 0.5% of their adjusted gross income (AGI).
For instance, if your AGI is $100,000, you can only deduct the amount that is above $500 (which is 0.5% of $100,000). So, if you donate $2,000 in cash, you’d only be able to deduct $1,500.
There are still existing rules that limit itemized deductions too. For instance, you can’t deduct contributions to public charities that exceed 60% of your AGI in that year. O’Saben also mentioned that the typical limits are usually around 30% for donations involving donor-advised funds or donations from private foundations.
On the bright side, you might still be able to deduct cash donations that you make beyond this limit in future tax years. Current rules allow you to carry over any “excessive” contributions for five years, letting you deduct them on future returns. “Excessive” refers to any cash contributions that exceed the new 0.5% AGI limit.
So, if your AGI next year remains $100,000, you’ll be able to exceed the first $500 of the cash gift and the remaining $60,000 (60% of AGI).
Lastly, O’Saben pointed out that you can’t claim both the $1,000/$2,000 deduction and additional itemizations.
Deductions for High-Income Filers Adjusted
For those in the highest tax bracket (37% income), the value of deductions will effectively be treated as if they fall into the 35% bracket.
Here’s a quick example: Let’s say you’re able to itemize and make a cash donation of $10,000. Usually, if you’re in the 37% bracket, your tax savings would be $3,700 (37% of $10,000). However, under the new rules, you would only save $3,500 (35% of $10,000).
Restrictions on Non-Cash Gift Deductions
Non-cash contributions like clothing, food, and household items will also be subject to this new 0.5%-of-AGI threshold when itemized.
If you’re taking the standard deduction, keep in mind that non-cash contributions won’t qualify since the $1,000/$2,000 limit only applies to cash gifts.
