The One Big Beautiful Bill Act (OBBBA) introduces changes related to charitable giving that take effect for the 2026 tax year:
A Universal Deduction for Non-Itemizers. Tax filers taking the standard deduction will enjoy a universal deduction of $1,000 ($2,000 for joint filers). Contributions must be made in cash. Contributions to donor advised funds are ineligible.
Observation: Since most taxpayers take the standard deduction, they will now derive some tax savings from their charitable giving.
New 0.5% Floor for Itemizers. Tax filers can deduct charitable contributions exceeding 0.5% of adjusted gross income (AGI). Thus, the first 0.5% of AGI in charitable giving generates no tax benefit.
Observation: The reduction in deductibility will be relatively modest. A taxpayer contributing $10,000 with an AGI of $100,000 still deducts 95% of his gift ($10,000 less $500 divided by $10,000).
Reduced Tax Benefit for Top Bracket Itemizers. All itemizers in the 37% bracket have their tax benefit capped at $0.35 per dollar of itemized deductions, which include mortgage interest, state & local property and income taxes, medical and charitable contributions.
Observation: For example, if you deduct $100,000 in mortgage interest, state taxes or charitable giving, your tax savings drop by $2,000—from $37,000 to $35,000.
Some things stay the same
Although the tax landscape is changing, the techniques of giving appreciated property and QCDs remain as viable as ever, and charitable gifts of cash remain at 60% of AGI.
The highest priority of any charity should be and is demonstrating the impact of your mission. Remember the tax incentives are available to all charities. Donors want to hear how your organization makes a difference!
A magna cum laude graduate of Cornell University, Christopher P. Woehrle earned his JD and LLM (Taxation) from the Widger School of Law at Villanova University, where he also is a member of the Graduate Tax Program Advisory Board. Chris is a member of the Pennsylvania Bar and teaches charitable gift planning and principles of wealth management in the LLM taxation program at the Widger School of Law
