Charitable Giving Under the New Tax Law: What Donors and Their Advisors Should Know

A new tax law was signed in July. Most of the rules related to charitable donations are intact, but there were a few changes that could affect your or your client’s charitable tax strategies as you consider 2025 year-end giving plans.

What’s new in 2026?

• A cap on the value of itemized deductions for those in the highest tax bracket. For taxpayers in the 37% marginal tax bracket, the tax value of all itemized deductions (including charitable deductions) is limited to 35%. This means a $10,000 donation produces $3,500 of tax savings rather than $3,700. Donors in this tax bracket may want to consider making donations in 2025 before this takes effect.
• A new “floor” for people who itemize. If you itemize, only the portion of your annual giving above 0.5% of your adjusted gross income (AGI) will be deductible. For example, with $1,000,000 of AGI, the first $5,000 of giving won’t generate a deduction; everything above that is deductible. Exploring a bunching strategy to exceed the 0.5% floor may be beneficial for you or your clients who are looking to maximize tax benefits from charitable contributions.
• A new “floor” for corporations. Corporate charitable deductions will only apply to giving above 1% of taxable income. The 10% cap on corporate charitable deductions remains in place.
• A permanent, above-the-line deduction for non-itemizers giving cash. If you take the standard deduction, you’ll be able to deduct up to $1,000 (for single filers) or $2,000 (for married couples filing jointly) for cash donations made directly to operating charities. Gifts to donor-advised funds, supporting organizations, or private nonoperating foundations don’t qualify for this deduction.

What else should I know? 

• The AGI deduction limit for cash gifts is now permanent. The higher cap for cash gifts to public charities was originally temporary but is now permanent. Donors who itemize can generally deduct cash gifts up to 60% of their AGI each year. The 30% AGI limit for long-term appreciated assets has not changed.

The changes that high earners will see in 2026 may reduce the tax advantages related to giving, so now is an excellent time to consider contributing to a donor-advised fund. Assets in donor-advised funds are invested, so they can grow as you support your favorite charities at your own pace. As always, the experts at Greater Horizons are available to discuss any potential gifts of unique assets as you consider your full portfolio for year-end giving. Contact us at info@greaterhorizons.org to learn more.

You can read the full text of the law here: One Big Beautiful Bill Act (OBBBA)

This article is for informational purposes only; please consult your tax advisor about your specific situation.

Authored by: Corey Ziegler, Chief Legal Officer