Rules for charitable giving tax deductions changing
Shift is part of package Trump signed into law
By: Medora Lee
USA Today
..... It's nearly the end of the year [2025] - the traditional time for charitable giving - but before opening your wallet, you should know how tax rules are changing so you can maximize your gifts.
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Charible tax deductiions aer aobut to see the biggest changes in nearly a decade in 2026 due to President Donald Trump's tax-and-spending package enacted as law under the One big Beautiful Bill Act.
..... The new rules affect both taxpayers who itemize deductions and others who don't itemize them and take the standard deduction. However, the effect are different for the two groups.
..... Financial experts have different advice for how to handle charitable contributions this year [2025 and next. [2026]
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Taxpayers who itemize deductions should hit fast-forward and give their gifts this year, [2925] but "non-itemizers" may want to pause until 2026 to maximize deductions, experts said.
..... "This is important and ends up being something a lot of clients want to talk about, even if they came to talk about something else," said Jane Ditelberg, senior vice president and director of tax planning for The Northern Trust Institute. "There's very specific advice around this compared to other things," in the tax law.
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Two major changes for those who itemize deductions start in 2026. they are:
* 0.5% adjusted gross income floor: Only charitable contributions that exceed 0.5% of a taxpayer's adjusted gross income, or AGI, are deductible. This applies to all taxpayers, not just the wealthiest. For instance, if your AGI is $200,00, the first $1,000 in donations is not tax-deductible.
* 35% cap on deductions value: For only those in the top 37% tax bracket, the tax befit from all itemized deductions (not just charitable contributions) for taxpayers will be capped at a 35% tax rate. This means a top earner who donates $10,000 will receive a $3,500 tax reduction instead of the $3,700 they would have received under the current rate.
.....Those who take the standard deduction instead of itemizing - about 90% of filers according to IRS data -can claim a charitable contribution deduction beginning next year. [2026]
* Above-the-line deduction: Non-itemizers will be able to claim a deduction for cash donations of up to $1,000 for single filers and $2,000 for couples filing jointly.
..... However, it's important to note that only cash donations are counted for the deductions, and the amounts aren't annually adjusted for inflation.
..... The new deduction is like the temporary $300 deduction for single and 4600 four joint non-itemizing filers during the COVID-19 pandemic in 20202 and 2021 that helped boost donations among small donors. IRS Statistics of Income data
showed more than 42 million additional taxpayers claimed the deduction resulting in an almost 411 billion boost to charities in 2020.
..... According to the Fundraising Effectiveness Project, donations of less than $250 rose 15.3% in 2020 compared with 2019, and gift of 4300, the exact amount allowed for the special tax deduction, jumped 28%. Taxpayers who itemize deductions can avoid the new floor in 2026 by giving more this season, [2025] experts said. Donors who give this year [2025] would receive a tax deduction for their entire charitable contribution instead of just the portion above 0.5% of AGI. High-net-worth givers may also consider bunching, or combining two or more yeas of donations, in 2025 to avoid the haircut on the cap to 35% from 37% on all itemized deductions they claim, experts said.
..... To illustrate how much taxpayers can save, let's say a high-income individual filer with $1 million AGI donates $20,000.
* In 2026: Due to the 0.5% of AGI floor, $5,000 would not be deductible. the remaining donation of $15,000 would only receive a 35% tax benefit, or $5,250.
* In 2025: The full $20,000 donation would receive the 37% tax benefit rate, or $7,400.
..... Non-itemizers should consider doing the opposite and wait until 2026 to donate their cash to get a deduction, experts said. donations in 2025 don't receive any deduction.
..... Other than writing one giant check, experts said taxpayers who itemize deductions might consider:
* Donor advised fund: Givers can contribute any amount to a DAF, take an immediate tax deduction for it and use the DAF money for donations over time. the money can also be invested to grow. "This is a good option for people who don't want to hand over four times the amount to an organization now," said Claudia Gonzalez, principal in Kaufman Rossin's Tax Services Advisory Group. "T Hey can pay it out over three to seven years."
* Foundation: A private foundation would have to be established and disburse a certain amount of money each year. This is an option for people who want total control over their donations, but they usually cost more to establish and run.
* Clean house: Cash isn't the only charitable contribution that's deductible. so are property and goods. "Yes, clean out the house and donate everything you're wanted to get rid of" Gonzalez said. "It's not just from a tax and economic point of view, but it's also cathartic to do so. If you have a college student or older family member, too. It can be cleansing."