2026 Changes to Charitable Deductions for Itemizers

While taxpayers who take the standard deduction receive some additional incentive to begin making charitable cash donations in the tax year 2026 and beyond, those who do itemize will face a few new restrictions on how much they can deduct for their charitable contributions.

For those who have been itemizing or will start again in 2026 due to the increased ceiling for State and Local Tax (SALT) deductions, there are some important new rules and restrictions to be aware of. In this post, we’ll discuss the changes and potential strategies to maximize the tax impact of your donations if you itemize.

What Are The Key Changes for Those Itemizing Deductions in 2026?

Key Changes infographic with woman silhouette at laptop desk
Change 1: For those who itemize deductions, charitable contributions are now subject to a 0.5% AGI Floor.

What does this mean exactly? It means that if you are itemizing deductions, any donation amount that is under 0.5% of your Adjusted Gross Income (AGI) won’t count towards your itemized deductions.

This is easier to understand with an example:

Let’s say your AGI is $100,000 per year and you itemize, rather than take the standard deduction. Your the AGI floor will be set at $500 ($100,000 * .005).

  • If you donate $300, none of it will be deductible because that amount is below your AGI floor of $500.
  • If you donate $600, only $100 will be deductible (the amount that exceeds the $500 AGI floor).
Change 2: For the very highest earners (those in the 37% tax bracket, which means single filers whose taxable income exceeds $640,600, or $768,700 for married couples filing jointly), the cap on charitable deductions will be limited to only 35% of the donated amount in excess of the AGI floor (down from 37% in 2025). 

Again, let’s look at an example:

Consider a single filer who makes $1,000,000 in taxable income and itemizes her tax return, and who also makes $15,000 in charitable contributions in 2026.

First, only $10,000, the amount above her $5,000 AGI Floor ($1,000,000 * .005) will be deductible. And her tax savings on that $10,000 will now be limited to $3,500 ($10,000 * 0.35).

Compared to her 2025 taxes, where her tax savings was $5,500 for this same donation amount, (because the entire $15,000 was deductible at her 37% tax rate), it’s clear that the same amount of donation will no longer go as far in tax bill reduction for high income earners

What are some strategies to mitigate the impacts of these tax law changes for itemizers?

Donation Bunching Strategy

Taxpayers who itemize may want to consider a donation bunching strategy, where they lump most of their donations for multiple years into a single year.

For example, If we go back to our taxpayer who has a $1,000,000 AGI. Rather than donating $15,000 each year, she might consider donating $45,000 once every three years. Because if she donates $15,000 each year, only $10,000 per year will be deductible due to her $5,000 AGI floor (so she’ll be able to benefit from a $30,000 deduction overall from her $45,000 of donations). However, if she bunches her donations for 3 years into a single year, $40,000 of donation will be deductible.

Donors considering this bunching strategy, however, should be thoughtful about not exceeding the 60% AGI ceiling on cash donations (and the 30% AGI ceiling on the donation of appreciated stock).

Combining a Bunching Strategy with a Donor Advised Fund (DAF)

Additionally, donors considering a bunching strategy but hesitant about reducing the regularity of their donations may want to consider using something like a Donor Advised Fund (DAF) where they can benefit from the tax benefits of bunching donations, while keeping a more regular donation schedule to the charities of their choosing.

For those older than Age 70.5: Qualified Charitable Distributions (QCDs)

For taxpayers older than 70 ½, and particularly those who are already at Required Minimum Distribution (RMD) age who have pre-tax retirement accounts like IRAs or 401ks, consider the benefits of utilizing Qualified Charitable Distributions (QCDs) rather than itemizing donations.

Oftentimes, a combination of maximizing QCDs, plus utilizing the standard deduction (and potentially now using the additional deduction for non-itemizers) may yield a tax benefit that is far greater than that which could be obtained from itemized donations.

Next month, we’ll dive more deeply into both the DAF and QCD strategies, and how they might work best under these new tax laws.