Charitable Donation Limits: What Changed Under the New Tax Law?
The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, significantly reshaped the rules governing charitable donation limits. Whether you itemize deductions or take the standard deduction, these changes affect how much of your giving translates into tax savings starting in 2026.
Here is what you need to know to give wisely and confidently.
Key Takeaways
- Non-itemizers get a new above-the-line deduction of $1,000 (single) or $2,000 (married filing jointly) for cash gifts to qualifying charities, effective 2026.
- Itemizers face a new 0.5% AGI floor, meaning only charitable contributions exceeding that threshold are deductible.
- The 60% of AGI ceiling for cash donations to public charities is now permanent, removing years of uncertainty about whether it would revert to 50%.
- Strategic giving matters more than ever. Gift bunching, donor-advised funds, and qualified charitable distributions can help you maximize every dollar.
- The 5-year carry-forward rule still applies for taxpayers who itemize, so excess contributions are not lost.
This article is for informational purposes only and does not constitute tax or legal advice. Tax laws are complex and subject to change. Please consult a qualified tax professional regarding your specific situation.
What the OBBA Changed for Charitable Donations
For years, the rules around the charitable donation limit felt like a moving target. The Tax Cuts and Jobs Act (TCJA) of 2017 nearly doubled the standard deduction, which pushed millions of taxpayers away from itemizing on Schedule A (Form 1040).
The CARES Act temporarily introduced a small above-the-line deduction for non-itemizers, but that expired after 2021. Many generous families were left wondering whether their donations still “counted” at tax time.
The OBBBA answers that question with two major changes to IRC Section 170, both effective for tax year 2026 and beyond. First, it creates a permanent above-the-line charitable deduction for non-itemizers. Second, it introduces a new 0.5% AGI floor for itemizers, which reduces the deductible amount for smaller gifts relative to income. Together, these provisions reward consistent, meaningful giving while adjusting the tax benefit for those who donate modest amounts compared to their earnings.
New Charitable Deduction for Non-Itemizers
If you have been taking the standard deduction, which rises to $16,100 for single filers and $32,200 for married filing jointly in 2026, you likely felt that your charitable gifts may not have had significant tax benefits. That changes now.
Under the OBBBA, non-itemizers can claim an above-the-line deduction of $1,000 for single filers or $2,000 for married couples filing jointly. This deduction applies only to cash contributions made to qualified 501(c)(3) organizations. Gifts to donor-advised funds and most private foundations do not qualify.
What makes this especially valuable is that the deduction is “above the line,” which means it reduces your adjusted gross income (AGI) directly. Social Security benefits become taxable once income exceeds $25,000 for single filers or $32,000 for married couples filing jointly, thresholds that have never been indexed for inflation. As a result, even a modest $1,000 to $2,000 reduction in AGI can reduce the portion of benefits subject to tax.
There are a couple of important limitations to keep in mind. This above-the-line deduction does not allow a carryforward for excess contributions. If you are single and donate $1,500 in cash, you can deduct $1,000, but the remaining $500 does not carry over to the next year. And because this deduction is limited to cash, donating appreciated stock or property will not qualify. However, those gifts may still make sense through other strategies we will discuss below.
New Limits for Itemizers: The 0.5% AGI Floor
If you do itemize your deductions, the OBBBA introduces a wrinkle that is easy to overlook. Starting in 2026, only charitable contributions that exceed 0.5% of your AGI are deductible under the new charitable contribution deduction rules.
Here is how that works in practice.
Say your AGI is $200,000. Half a percent of that is $1,000. If you donate $10,000 to your favorite charity, only $9,000 is deductible because the first $1,000 falls below the floor. For most generous donors, this floor is a relatively minor adjustment. But for families whose giving is modest relative to their income, it chips away at the deduction.
Additional Nuance for High Earners
For taxpayers in the top income bracket (tax rate 37%), the tax benefit of itemized deductions is effectively limited to a 35% rate rather than their full marginal rate. This applies to single filers with income above $640,600 and married couples filing jointly above $768,700. It is a small haircut, but worth knowing if you are planning a large gift.
On the brighter side, the OBBBA made the 60% of AGI ceiling for cash contributions to public charities permanent. Before the TCJA, this ceiling was 50%. The TCJA raised it to 60% on a temporary basis, and there had been real uncertainty about whether Congress would let it revert. That question is now settled.
Charitable Contribution Limits by Donation Type
Clients often ask: “How much can I actually deduct?” The answer depends on what you give and who you give it to. Below is a comparison of the current IRS charitable donation limits by type for use in preparing 2025 returns:
Cash to public charities
60% of AGI
5 years
Long-term appreciated property to public charities
30% of AGI
5 years
30% of AGI
5 years
Appreciated property to private foundations
20% of AGI
50% of AGI (special rules apply)
15 years
The 5-year charitable contribution carryover (for taxpayers who itemize) is worth highlighting. If your generosity exceeds the AGI ceiling in a given year, the excess does not disappear. You can carry it forward and deduct it over the next five tax years, subject to the same percentage limits. This is especially relevant for families making large one-time gifts, such as funding a charitable endowment or contributing a significant appreciated asset.
Strategies to Maximize Your Charitable Deduction
Knowing the rules is one thing. Putting them to work for your family is another. Here are strategies that can help you navigate the new landscape and make your giving go further.
Gift Bunching
The idea is simple: instead of donating the same amount every year, you concentrate two or three years of giving into a single year. In the “on” year, your total contributions push you past the standard deduction threshold, allowing you to itemize. In the “off” years, you take the standard deduction. With the new 0.5% AGI floor in play, bunching also helps ensure a larger share of your gifts clears that threshold.
Donor-Advised Funds (DAFs)
You can contribute a lump sum to a DAF in your bunching year, claim the full deduction, and then distribute grants to your chosen charities over time. Your favorite organizations still receive steady support, and you capture the maximum tax benefit. Keep in mind that contributions to DAFs do not qualify for the new non-itemizer deduction, so this strategy is for itemizers only.
Qualified Charitable Distributions (QCDs)
These remain a standout option for anyone age 70½ or older with an IRA. If all requirements are met, a QCD lets you transfer up to $108,000 directly from your IRA to a qualified charity in 2026. If the transfer is made directly, the distribution may be excluded from your taxable income (IRS Notice 2025-67). For retirees who want to support causes they love while keeping their tax picture clean, QCDs are hard to beat.
Donating appreciated securities
Donating appreciated securities instead of cash is another option. When you give stock or other assets that have grown in value and that you have held for more than a year, you avoid capital gains tax on the appreciation while receiving a deduction for the full fair market value (outcomes depend on holding period, asset type, and recipient).
What Has Not Changed?
Amid all the new provisions, several foundational rules remain exactly as they were.
Your donations must go to qualified 501(c)(3) organizations to be deductible. The IRS maintains a searchable database (Tax Exempt Organization Search) where you can verify a charity’s status before you give.
Substantiation requirements have not changed either. Any donation of $250 or more requires a written acknowledgment from the charity received at the time of the gift. For cash donations of any size, you need a record or written communication from the organization. These documentation rules are outlined in IRS Publication 526, and overlooking them is one of the most common reasons deductions get denied on audit.
The 5-year carryforward for excess charitable contributions continues to apply across all donation types (with the exception of conservation easements, which have a longer carryforward period). And QCD rules remain intact under the new law, preserving one of the most valuable tools in a retiree’s charitable toolkit.
Frequently Asked Questions
How much can you deduct in charitable contributions in 2025 versus 2026? For tax year 2025, the rules from the TCJA still apply: up to 60% of AGI for cash gifts to public charities if you itemize, with no above-the-line deduction for non-itemizers. Starting in 2026, the OBBBA adds the new $1,000/$2,000 non-itemizer deduction and introduces the 0.5% AGI floor for itemizers.
Does the new non-itemizer deduction apply to donations made through my workplace giving program? It depends on how your employer structures the program. If your payroll deduction goes directly to a qualified 501(c)(3), it should qualify. However, if it routes through a DAF or a private foundation, it will not. Check with your HR department and a tax professional to confirm.
Can I combine the non-itemizer deduction with a QCD? Yes, these are separate provisions. A QCD is excluded from income entirely and does not appear on Schedule A. The non-itemizer deduction is a separate line item that reduces AGI. If you are 70½ or older, using both can be especially effective.
What happens if the 0.5% floor costs me more than the non-itemizer deduction would give me? This is exactly the kind of scenario where running the numbers matters. Some taxpayers near the itemizing threshold may find it more advantageous to take the standard deduction plus the new above-the-line deduction rather than itemizing. A trusted financial advisor or tax professional can model both scenarios for your specific situation.
Are contributions to my church still deductible? Yes, as long as your house of worship is a qualified 501(c)(3) organization, contributions remain deductible under the same rules. Cash gifts qualify for both the itemizer deduction and the new non-itemizer deduction (non-itemizers face separate caps and itemizers face percentage/floor limits).
Your Giving Deserves a Thoughtful Plan
It is natural to feel uncertain when the tax rules shift beneath your feet, especially when your charitable giving reflects values you have held for a lifetime. The good news is that the new law creates opportunities alongside its changes. With the right strategy, you can continue supporting the causes closest to your heart while making the most of every tax benefit available to you.
At SKY Investment Group, we help families build giving strategies that align with their financial journey and their legacy. Whether you are exploring donor-advised funds, considering QCDs, or simply want to understand how the new charitable donation limit rules affect your plan, we are here to help you think it through.
SKY Investment Group, LLC is an SEC registered investment advisor. Being registered with the SEC does not imply any specific level of skill or training.
Neither SKY Investment Group, LLC nor Aspen provide tax or legal advice—please contact a professional for advice in such matters.
Investing involves the risk of loss, including the risk of loss of the entire investment. Diversification does not ensure a profit or protect against a loss.
