Beginning in 2026, the One Big Beautiful Bill Act (OBBBA) makes several changes that impact charitable giving, particularly for corporate donors and individuals who itemize.
The three main areas that will change are as follows.
Universal Charitable Deduction of $1,000 Per Individual Who Doesn’t Itemize
Beginning in 2026, individuals who don’t itemize can claim a charitable deduction for cash gifts of up to $1,000 for individuals and $2,000 for couples filing jointly.
Considerations/Impact: The bill offers potential benefits for the 90% of taxpayers who don’t itemize, even for smaller donations. Note: DAF contributions aren’t eligible for the universal charitable deduction.
Changes to Deductions for Individuals Who Itemize
Individuals who itemize must exceed 0.5% of their adjusted gross income (AGI) before any charitable donation qualifies for a deduction. For example, if your AGI is $500,000, the first $2,500 of charitable contributions ($500,000 x 0.5%) wouldn’t be deductible. Only giving above that amount would qualify for a charitable deduction. A $10,000 donation would provide a $7,500 deduction. Deductions are capped at 35%, even for those in the 37% marginal tax bracket.
Considerations/Impact: Mid-level gifts from wealthier donors may lose tax deductibility, reducing tax incentives for some donors. Please see this article for more information on how to appeal to these donors in maximizing their gifts.
New Floor for Corporate Donations
A corporation’s charitable contributions are deductible only to the extent they exceed 1% of taxable income, still capped at 10%. (Excess above 10% can carry forward five years; contributions below 1% floor are nondeductible and only carry over if a future year exceeds the 10% cap.)
Considerations/Impact: If a company’s charitable giving doesn’t meet this threshold, it won’t receive the tax benefits of past years. Consider talking to corporate sponsors and encouraging them to bunch gifts in a single year, then grant out over time, in order to enhance the tax benefits of a corporate giving program.
There’s also a provision for donors who give to qualifying nonprofit organizations that provide scholarships for K-12 students. Starting in 2027, taxpayers can claim a nonrefundable credit up to $1,700 (or 100% of the gift, whichever is lower) for cash or marketable security donations. The credit would be taken instead of a charitable contribution deduction and would be reduced by any amount allowed as a credit on a state tax return. The credit is limited to $1,700, but excess over $1,700 may be carried over for five years.
How We Can Help
Connect with the Creative Planning Institutional Services team to discuss how these changes could impact year-end and future fundraising.
