The One Big Beautiful Bill Act (OBBBA) made several changes to charitable contributions, including deductions for non-itemizers, a new floor for deductible charitable contributions, and a cap on the tax benefits for high-income taxpayers. The bill also contains changes for charitable contributions made by corporations.
Starting in 2026, taxpayers who do not itemize (i.e., those taking the standard deduction) will now be able to deduct cash contributions to qualified public charities up to $1,000 for single filers and $2,000 for married couples filing jointly.
For those who do itemize (i.e., deduct charitable contributions on Schedule A), there will be a new floor of 0.5% of “contribution base” (essentially AGI). Only charitable contributions that exceed this 0.5% threshold will be deductible. For example, if your AGI is $200,000, the first $1,000 of contributions would not be deductible under the new rule.
Additionally, for taxpayers in the top 37% tax bracket, the value of charitable deductions will be capped such that deductions only yield a tax benefit at the 35% rate. That is, even if your marginal rate is 37%, your deduction is effectively limited to 35%. The 60% AGI limitation for cash gifts to public charities (a limit under earlier law) remains in place as permanent.
Corporate donors are also affected. Corporations will now have a 1% floor on charitable contributions (i.e., the contribution must exceed 1% of modified taxable income before being deductible). The deduction is also capped (the historical 10% limit persists) and disallowed amounts may be carried forward for up to 5 years.
These changes should cause high-income individuals who itemize deductions to carefully consider the timing and amounts of their gifting and the strategies to maximize their deduction. For example, a bunching strategy may help you make the most of your charitable contributions. Donor-advised funds are great vehicles for bunching charitable contributions without interrupting your consistent annual support for charities.
In this new landscape, thoughtful planning is essential to preserve the impact and benefits of charitable giving. If you’re considering how best to structure your philanthropy under the OBBBA, we’re here to help. Ask us how a donor-advised fund may support your goals while maximizing your tax benefits.
Cogent Private Wealth is a fee-only SEC-registered investment adviser. Investments are not FDIC insured, not bank guaranteed, and may lose value.
