The One Big Beautiful Bill (OBBB), signed into law in 2025, made several changes to the tax deductions available for charitable giving. Beginning in 2026, donors will face both new opportunities and new limitations. While the net impact will vary from one taxpayer to the next, proactive planning can maximize the value of charitable deductions.

Key Changes Effective in 2026

• Standard deduction charitable allowance: Individuals who claim the standard deduction may deduct up to $1,000 of cash contributions to qualifying public charities ($2,000 for joint filers). This deduction is in addition to the standard deduction and benefits non-itemizers. Contributions to donor-advised funds (DAFs), supporting organizations, and most private nonoperating foundations do not qualify.
• 0.5% floor on itemized charitable deductions for individuals: Itemizers must reduce their charitable deduction by 0.5% of their contribution base, generally adjusted gross income (AGI) with certain modifications. For example, a taxpayer with $1,000,000 of AGI will lose $5,000 of otherwise allowable charitable deductions annually.
• 60% AGI ceiling made permanent: The 60% of AGI limitation for cash contributions to public charities is now permanent. Without OBBB, this limit would have reverted to 50% after 2025.

Ceiling Limitations and Carryforward Rules

Different ceiling limitations continue to apply to noncash gifts and to contributions made to organizations other than public charities, including 50%, 30%, and 20% limits. Amounts disallowed due to ceiling limitations may be carried forward for five years. Amounts disallowed due to the new 0.5% floor may also carry forward for up to five years, but only in years when ceiling limitations are exceeded.

• New overall itemized deduction limitation for top-bracket taxpayers: Individuals in the 37% tax bracket must reduce total itemized deductions by 2/37ths of the lesser of (a) total itemized deductions or (b) taxable income in the top bracket. This effectively caps the tax benefit of itemized deductions, including charitable contributions, at 35%.
• New corporate charitable deduction floor: The charitable deduction available to C corporations will be reduced by 1% of taxable income. The familiar 10% ceiling limitation still applies, and the five‑year carryforward remains in place when corporations are subject to the ceiling limitation.

Tax Planning Considerations

The changes above may have limited impact for some donors, but they can materially affect high-income individuals. Key planning considerations include:

• Bunching multi-year charitable contributions: Combining multiple years of charitable gifts into one year can maximize itemized deductions. Donor-advised funds allow donors to bunch contributions while distributing grants over time. Bunching deductions can be effective in alternating between itemized deductions and the standard deduction to maximize the total allowable deductions over a multi-year period. Ceiling limits and carryforward rules must be considered.
• Qualified charitable distribution (QCD): Taxpayers age 70 ½ or older may make QCDs directly from IRAs to public charities. QCDs are excluded from gross income and satisfy required minimum distributions. The 2026 QCD limit is $111,000 per person (indexed annually). QCDs cannot be made to DAFs, supporting organizations, or most private nonoperating foundations.
• Donate appreciated assets instead of cash: Giving appreciated assets that would generate long-term capital gain income if sold avoids capital gains tax and provides a charitable deduction equal to the fair market value of the asset. This works particularly well with the donation of publicly traded stock because qualified appraisals are not required to determine the value of publicly traded stock. Furthermore, noncash contributions of appreciated capital gain assets are subject to the lower ceiling limitations of 30% or 20%, depending on the type of done organization.

The bottom line? The OBBB doesn’t change the value of generosity, but it raises the stakes for thoughtful, well-coordinated tax planning.