Jul 30, 2025
New tax code changes set for 2026 could significantly reshape how individuals and corporations approach charitable giving, offering both new opportunities and new challenges for the charitable sector.
New charitable deduction rules will take effect in 2026 that will affect itemizers, non-itemizers and corporations. Here’s how different types of donors will be impacted.
As part of legislation passed earlier in July, individuals who don’t itemize their deductions for tax filings will become eligible for charitable giving deductions in 2026. For individuals, the deduction will be up to $1,000 and $2,000 for couples. These figures don’t include in-kind gifts of goods or services or donations to crowdfunding campaigns posted by individuals. These deductions are for cash gifts only and don’t include gifts of in-kind goods or services or those to donor-advised funds. While these restrictions may not fit everyone’s giving strategies, these changes may encourage more people to contribute.
Itemizers will be able to deduct only cash contributions that exceed 0.5% of their adjusted gross income (AGI). In other words, this itemization floor means if your AGI is $100,000, only gifts above $500 are eligible for deductions. Additionally, itemizers won’t be able to deduct the portion of cash donations above 60% of AGI (for the year they are made). Some individuals may choose to lump several years of charitable contributions into one year or consider the flexibility of donor-advised funds.
Corporate giving will be facing new restraints as a 1% AGI floor will go into effect as well. If corporate contributions fall below 1%, these organizations will have to decide whether to give above the threshold in a given year to reap the tax benefits but bundle multiple years’ worth of giving into one year, a situation that complicates charity planning and budgeting.
Charities are hopeful that the new tax breaks for those taking the standard deduction will encourage new donors and bring others back to the table. Some estimates predict tens of billions in new charitable revenue. A more cautious estimate points not to a short-term boon but to the long-term benefits of charities re-engaging with donors. A lot will depend on charity’s ability to connect with donors, help them understand the new tax benefits, and highlight the advantages of giving to an established organization in a diverse and competitive marketplace.
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