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Unpacking the 2026 Tax Code Changes That Impact Charitable Giving

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By Mike DiPaolo, Vice President for Philanthropy & Southern Delaware

The “One Big Beautiful Bill Act” introduces several significant changes to the tax treatment of charitable contributions for those who itemize – including high-income itemizers – and for those who do not, as well as for corporations.

Beginning January 1, 2026, individuals who do not itemize deductions will be able to claim an “above-the-line” deduction for cash gifts: up to $1,000 for single filers and $2,000 for married filing jointly. 

For itemizers, a new floor is introduced: only the portion of contributions exceeding 0.5 % of adjusted gross income (AGI) will be deductible.  The longstanding 60 %-of-AGI limit for cash donations to public charities is made permanent. 

For corporations, starting in 2026 the Act imposes a 1 % floor: corporate charitable contributions are deductible only if they exceed 1 % of taxable income (with an unchanged 10 % ceiling).

Additionally, for high-income individual itemizers, the Act caps the value of itemized deductions at 35% of each dollar (even if the marginal rate is 37%). Together, these changes broaden access to a deduction for non-itemizers but also reduce the tax incentive for larger donors and corporations through floors and caps.

Effective Dates

Many of the major charitable-deduction changes apply to taxable years beginning after December 31, 2025 (i.e., the 2026 tax year onward). For example:

  • The above-the-line deduction for non‐itemizers (up to $1,000 single / $2,000 married) becomes effective for taxable years beginning after December 31, 2025.
  • The 0.5% “floor” on the deduction for itemizing individuals likewise applies for taxable years beginning after December 31, 2025.
  • The 1% floor on charitable deductions for corporations applies to taxable years beginning after December 31, 2025.
  • Some related non-charitable tax provisions have different effective dates (but charitable giving, these are the main ones).

Exceptions / Special Rules / Other Key Provisions

  • Gifts to donor-advised funds (DAFs) and certain private foundations: The above-the-line deduction for non‐itemizing taxpayers does not apply to contributions to donor-advised funds or private non-operating foundations.
  • The 60% of AGI limit on certain cash gifts to public charities: The OBBB makes permanent the previously temporary higher limit (60%) for cash gifts to qualified public charities for itemizers.
  • For “top bracket” individuals (marginal rate ~37%): The tax benefit for charitable contributions will be capped at a 35% deduction rate (even if the marginal tax rate is 37%).
  • Carryforward and deduction base issues: For individuals who itemize, the charitable deduction is allowed only to the extent contributions exceed 0.5% of AGI (their “contribution base”).
  • For corporations: The deduction for charitable contributions is allowed only if the aggregate contributions exceed 1% of taxable income, and still subject to the 10% ceiling.

Note: While not strictly charitable giving “exceptions”, planning timing matters: many advisers suggest that significant charitable gifts made in 2025 may benefit under the “old” rules before the 2026 changes apply.

To learn more, speak with your financial advisor or reach out to the Delaware Community Foundation’s Philanthropic Services Team.