Josh Beauregard is a Corporate Controller, a CPA, and Dad to Maddox (13) and Kiki (10). He’s also a caregiver-member of our CLOVES Community, and was kind enough to write this blog post for us, helping demystify the changes coming to charitable giving deductions in the United States in 2026. Some of the changes may affect how you donate at the end of 2025, so read on to learn more. And, of course, if you have a financial advisor, you should always consult them before making any big changes to your giving strategy.
- Why are deductions changing?
- Decreasing deductions for itemizers and businesses
- New deductions for other taxpayers
- Strategies
On July 4th, 2025 the One Big Beautiful Bill Act (OBBBA) was signed and enacted into law. Whether you are in favor or against the current administration, the OBBBA is, for now, the new tax reality in this country. The bill introduced one of the most sweeping rounds of tax reform in the history of the United States. Included in those reforms, and the reason for this post, are changes to how charitable deductions are viewed by the IRS.
There have been rumors that the deduction for contributions to registered charitable organizations would be eliminated entirely. That is simply not true. Contributions are still an available deduction for taxpayers who itemize their returns. Your donations are still relevant for your tax planning strategy.
With that in mind, how much you are able to recognize has changed and, for most, has opened up more possibilities. We will approach this in three different categories:
- Taxpayers who itemize their deductions
- Taxpayers who don’t itemize and use the standard deduction
- Businesses
Taxpayers who Itemize Deductions
Generally speaking, a taxpayer who itemizes may deduct up to 50% of their adjusted gross income (AGI) for donations to charitable organizations (there can be limits for the type of donation). That means that if you recognize $100,000 of AGI, you can deduct up to $50,000 of donations.
Beginning in 2026 those donations must meet a 0.5% floor to be deductible. This means that only the donations that are in excess of the floor can be considered. This limits the impact of the deduction.
| 2025 | 2026 | |
| Charitable Donation | $10,000 | $10,000 |
| Income | $150,000 | $150,000 |
| 0.5% Floor | $0 | $750 |
| Deduction Allowed | $10,000 | $9,250 |
| Tax Rate | 20% | 20% |
| Tax Savings | $2,000 | $1,850 |
In the above example, a family earning $150,000 in AGI would benefit more from the 2025 rules than the new OBBBA rules.
Businesses
Similar to individuals who itemize, businesses are now subject to a floor of 1% and are limited to 10% of their taxable income (unused donations can be carried forward to new tax years). This is significant in that many organizations rely on businesses to be their largest single donation group. But the incentive may no longer exist.
| 2025 | 2026 | |
| Charitable Donation | $100,000 | $100,000 |
| Income | $2,000,000 | $2,000,000 |
| 1.0% Floor | $0 | $20,000 |
| Deduction Allowed | $100,000 | $80,000 |
| Tax Rate | 21% | 21% |
| Tax Savings | $21,000 | $16,800 |
In the above example, a business who donates $100,000 in a year will be losing $4,200 in tax savings.
Taxpayers who Don’t Itemize
This is the biggest change to contributions. Starting in 2026, individuals previously not allowed to deduct donations can now take up to $1,000 of deduction ($2,000 for joint filers) per year regardless of filing status. As of 2022, this group made up 90% of all individual tax payers, and that number is expected to grow. Why is this significant? In 2021, there were an estimated 166,900,000 individual tax returns processed. Of those approximately 150 million were non-itemized returns. If every tax return contributed $1,000 then $1.5 Billion would be injected into the charitable organization economy. Without incentive in previous years, this number was certainly much much lower.
What Should I Do?
Ultimately this should depend on who you are, what type of taxpayer you are, and your overall financial planning goals.
Taxpayer who itemizes – Consider moving your donations into 2025 tax year. You will be maximizing the amount of tax savings realized. This should not be construed as not to donate in 2026 and beyond, but if you are able to increase your donations in 2025, it should be considered.
Business – As with itemizers, maximizing 2025 should be paramount, especially as it is expected that excess contributions will carry forward to new years. Also to be considered in 2026 is that the miscellaneous office and kitchen snack expenses will no longer be deductible. To maximize the tax savings, consider taking advantage of remaining incentives.
Taxpayer who does not itemize – If you fall in this category and you donate around The Holidays, consider moving it a little bit and donating in January to take full advantage of the new laws. Additionally, tax advantage of the new laws. This is a brand new avenue not available before and opens up incentives to tens of millions of taxpayers every year.
Disclaimer: Yes, I am a CPA. But I am not your CPA and this article does not constitute a fiduciary relationship. I am licensed to practice accounting in the State of Washington. This article is meant to be informational and should not be viewed as personal advice. You should consult with your tax professional or financial planner before you rely on this information.