2026 Brings Back Charitable Contribution Tax Benefits for Many, But Adds Restrictions for Others

When the Tax Cuts and Jobs Act (TCJA) passed in 2017, it largely took away any tax incentive to make charitable contributions for most average taxpayers.

When the Tax Cuts and Jobs Act (TCJA) passed in 2017, it largely took away any tax incentive to make charitable contributions for most average taxpayers.

Though there were several mechanisms at play here that devalued charitable contributions from a tax planning perspective (even for folks who continued to itemize), the primary driver was simply that the increased standard deduction and some of the new limitations it placed on itemized deductions removed the advantage of itemizing deductions for many taxpayers. And because charitable contributions were considered as part of the itemized deductions portion of the tax return, there was simply no longer a place to get credit for them when you filed your taxes.

The estimated overall impact of this, in 2018, the first year the new tax laws took effect, was a roughly $20 billion decrease in charitable giving. About $4 billion of this was considered a one-time drop, due to some taxpayers moving their 2018 planned giving up to 2017 to benefit from the old tax law, while $16 billion was considered a permanent anticipated annual reduction in charitable giving due to the elimination of the tax benefit.

Now, with the legislative changes in the One Big Beautiful Bill Act (OBBBA) of 2025, average, non-itemizing taxpayers will, once again, have a limited ability to see a tax benefit from their charitable contributions.

So, if you’ve been continuing to give, but not claiming it on your taxes, or you’ve simply stopped giving because you didn’t see any benefit from this on your tax return, it may be time to start keeping those charitable contribution receipts again, and/or to reconsider your position on gifting.

What are the key points to know about this new deduction?

Typographic image depicting the top 4 key points for the new deductions. Read more to get the details
  • Standard Deduction Only – It only applies to those using the standard deduction (If you itemize, you cannot claim this, and you’ll be looking at a few new restrictions on what you can claim on your itemized charitable deductions, a topic we’ll cover in our next post.)
  • $1,000 – $2,000 Yearly Limit – An individual taxpayer utilizing the standard deduction can claim up to $1000 in charitable donations per year, while married filing jointly taxpayers can claim up to $2000 per year.
  • Direct Donations Required – Only direct monetary donations (cash, check, credit or debit card) made to registered 501(c)(3) public charities count for the deduction. (Appreciated stock and property donations do not count, so no need to keep those receipts for donations of your old clothing made to the Goodwill!)
  • No DAFs – Donations to Donor Advised Funds (DAFs) are not eligible for this particular deduction.

Who might not benefit from this change?

Those who have continued to Itemize Deductions.

Obviously, those who are itemizing deductions don’t stand to benefit from this change. In fact, those who itemize will face new restrictions on what they can claim for itemized charitable contributions, such that any amount of donation under 0.5% of their Adjusted Gross Income (AGI) will no longer be counted towards their itemized deductions. We’ll have more on how the new law impacts those itemizing deductions in our next post.

Those Using the Standard Deduction who will once again Benefit from Itemizing

It seems obvious that those who currently itemize wouldn’t stand to benefit from this law, but there are also a group of folks who have been claiming the standard deduction since 2018, who might make their donations, only to find out at the end of the year that they are now (at least for a little while) better off itemizing, and therefore subject to the new 0.5% of AGI floor referenced above.

The bulk of these folks are going to be the ones who have, historically been impacted by the inability to deduct what are referred to as “SALT” taxes – state and local property, income, and sales taxes, above the $10,000 cap ($20,000 for those who are married filing jointly) imposed by the TCJA. That cap has been raised by OBBBA (temporarily, through the end of tax year 2029) to $40,000 ($80,0000 for those who are married filing jointly).

This means some folks who live in states with particularly high income or property taxes, who were taking the standard deduction in 2025, will now be itemizing deductions for the next 4 years. So, from a tax planning perspective, it makes sense to figure out whether it will make sense for you to continue to itemize in 2026 before creating a charitable gifting tax strategy as part of your tax plan, since different rules and limits will apply to your situation depending on whether you itemize or claim the standard deduction.

Those Who Donate through QCDs

Lastly, for anyone who is taking RMDs and who has been (or is eligible to be) making their donation directly from their IRA, it doesn’t make sense to deviate from using a Qualified Charitable Distribution (QCD) strategy. This new tax law offers no advantage over using QCDs, and QCDs have a substantially higher limit (and therefore potential tax benefit), and do not require you to know in advance whether you’ll be itemizing or claiming the standard deduction in 2026. So, if you have an IRA and you’re over the RMD age, QCDs are likely still going to be your best and most reliable strategy for donations.

How Much Tax Benefit Do You Actually Get from Donating

It’s important to understand the overall tax benefit you get from donating if you’re planning to use it as part of a comprehensive tax strategy.

Because deductions provide a dollar for dollar reduction in income (as opposed to credits, which provide a dollar for dollar reduction in actual taxes owed), the answer depends on your current tax bracket

For example:

A single filer with a taxable income of under $50,400 is likely in the 12% tax bracket (or possibly even 10%), and therefore the reduction in taxes owed by making a $1000 donation would be 10 or 12% of $1000 – so $100 or $120.

A single filer with a taxable income between $50,401 and $105,700 on the other hand, is in the 22% tax bracket, so a $1000 donation would save them $220 on their overall tax bill.

So, if you want to determine just how much of a tax break you’ll get from the donation you make, first, you’ll need to know your anticipated tax bracket, then you’d multiply the donation amount you intend to make in 2026 by the percentage of taxes you pay. That will show you the tax savings you can expect from your charitable contributions in 2026.

Reconsidering Your Charitable Giving Tax Strategy

Tax law is always changing, which is part of why holistic financial planning that includes tax planning remains important. For those of you who may have given up charitable gifts as part of an overall tax strategy, 2026 may be the time to reconsider that position, but to fully understand how the new charitable gifting tax opportunities will benefit you, it’s important to understand how your tax filing strategy, and whether or not you itemize, will be impacted by the new changes for 2026.