Donation Changes Under OBBBA 2026: What Actually Matters 

Donation Changes Under OBBBA 2026: What Actually Matters 

The One Big Beautiful Bill Act changed the rules on charitable deductions starting January 1, 2026. Some changes help everyday donors. Most create new considerations for high earners who itemize. Let me walk you through what’s changing so you can make informed decisions that align with your values and financial goals. 

For People Who Don’t Itemize 

Starting in 2026, you can deduct up to $1,000 in cash donations ($2,000 if married filing jointly) even if you take the standard deduction. 

This only applies to direct cash gifts to public charities. Donations of clothing or household items, gifts to donor-advised funds, or private grant foundations do not qualify for this benefit. 

If you typically give a few hundred dollars to charity each year and take the standard deduction, this creates new value you didn’t have before. My recommendation? Start tracking those donations now. Keep your receipts organized throughout the year. It’s a simple habit that protects your deduction when tax time comes around. 

For People Who Itemize: The 0.5% Floor 

Here’s an important change that affects itemizers.  

Only donations above 0.5% of your adjusted gross income are deductible. So, if your AGI is $200,000, the first $1,000 you give doesn’t count toward your deduction. If your AGI is $1 million, the first $5,000 won’t be deductible. 

Let’s look at a practical example: You make $500,000 and donate $20,000 to charity. The first $2,500 (0.5% of $500,000) is not deductible. You can deduct $17,500. 

For High Earners in the Top Tax Bracket: The 35% Cap 

If you’re in the 37% tax bracket (your taxable income is above $640,600 if you’re single or $768,700 if you’re married), there’s another layer to understand. Your itemized deductions, including charitable donations, are now capped at 35%. 

That means every dollar you donate doesn’t save you 37 cents in tax anymore it saves you 35 cents. It’s not just charitable giving, either. This applies to all itemized deductions combined — mortgage interest, SALT, casualty losses, and gambling losses. The deduction still works. It’s just slightly less valuable. And when you’re talking about six-figure deductions, that 2% is significant money. 

These changes work together. High earners face both the AGI floor and the reduced deduction value. A $100,000 donation on $1 million in income used to save $37,000 in federal taxes. In 2026, it saves approximately $33,250. 

That’s almost a 10% reduction in tax benefit for the same level of giving. It’s worth factoring into your planning. 

What Stayed the Same (and Some Good News) 

The 60% AGI limit for cash donations to public charities is now permanent. It was set to revert to 50%, but that didn’t happen. 

If you’re making larger charitable contributions in a single year, you still have room to deduct up to 60% of your AGI in cash contributions. Anything above that can be carried forward for up to five years. 

That permanence is helpful. It gives you planning certainty and allows you to structure multi-year giving strategies with confidence. 

For Corporations 

Corporations can now only deduct charitable donations between 1% and 10% of taxable income. There’s a 1% floor, meaning the first 1% of taxable income donated provides no tax benefit. 

This affects smaller businesses more significantly. If your company has $500,000 in taxable income and donates $3,000, the first $5,000 (1% of $500,000) is disallowed. Since you only gave $3,000, you wouldn’t receive a deduction. 

If you’re a business owner who values charitable giving, this is worth discussing with your tax advisor. There may be better ways to structure your giving to maximize both impact and tax benefits. 

What You Can Do About It 

If you don’t itemize and you’re already a regular donor, tracking your cash gifts starting in 2026 becomes more important. That $1,000 or $2,000 deduction represents real savings. 

If you’re close to the itemization threshold, it’s worth running the numbers. The combination of higher standard deductions and the new AGI floor might affect your itemization decision. Understanding where you fall helps you plan effectively. 

If you are over age 70 , consider making a tax-free distribution from your IRA to charity. The benefit is twofold. The distribution is excluded from your taxable income, and it avoids the new 0.5% AGI floor that now applies to itemized charitable deductions. 

And here’s something worth considering: if you’re borderline on itemizing, bunching donations might help you cross the itemization threshold, allowing you to deduct mortgage interest, state taxes, and other items that only count when you itemize. One strategic decision can create multiple beneficial outcomes. 

What This Actually Means 

Most of these changes generally reduce the tax benefit of charitable giving for higher-income individuals. The new floor, the reduced deduction cap, and the higher standard deduction all point in that direction. 

If you give because you care deeply about the causes you support, that hasn’t changed. If tax benefits are part of your decision-making process, the math has shifted slightly. Both motivations are completely valid. 

When the tax benefit shrinks, strategy matters more than ever. If you’re making significant charitable contributions, I’d encourage you to connect with your tax advisor. Model what 2025 versus 2026 looks like for your specific situation. Confirm your AGI projections. And if bunching contributions makes sense for you, make sure everything is properly documented before December 31. 

The families and business owners I’ve worked with over the years appreciate having time to make these decisions thoughtfully rather than rushing at year-end. You deserve that same clarity and peace of mind.