As year-end approaches—the peak season for charitable giving—understanding upcoming tax law changes is essential to maximizing the impact of your donations.

Charitable tax deductions will undergo their most significant transformation in nearly a decade when new rules take effect in 2026, courtesy of President Donald Trump’s comprehensive tax and spending legislation. These changes affect both itemizers and non-itemizers, though in distinctly different ways.

Financial advisors recommend divergent strategies based on your tax situation. Itemizers should accelerate charitable giving into the current year, while non-itemizers may benefit from delaying donations until 2026 to optimize their deductions.

“This has become a priority conversation topic for clients, often taking precedence over their original agenda,” Jane Ditelberg, senior vice president and director of Tax Planning for The Northern Trust Institute, told USA Today. “The guidance surrounding charitable deductions is precise compared to other aspects of the tax law.”

The timing of your charitable contributions can significantly affect your tax benefits, making professional guidance particularly valuable as these changes approach.    

How Charitable Deduction Rules Change for Itemizers in 2026

Two significant modifications affecting itemized charitable deductions take effect in 2026:

0.5% Adjusted Gross Income (AGI) Floor Only charitable contributions exceeding 0.5% of your AGI will qualify for deduction. This threshold applies universally to all taxpayers, regardless of income level. For example, someone with $200,000 in AGI must donate more than $1,000 before any amount becomes tax-deductible – meaning the initial $1,000 in donations generates no tax benefit.

35% Deduction Value Cap for High Earners Taxpayers in the top 37% tax bracket will face a new limitation: all itemized deductions (including but not limited to charitable contributions) will be capped at a 35% tax rate benefit. Under this rule, a high-income taxpayer donating $10,000 will receive a $3,500 tax reduction rather than the $3,700 they would receive under current law – effectively reducing the tax benefit by $200.

These changes create a double impact for wealthy itemizers: they must clear a minimum giving threshold before any deduction applies, and even then, their tax benefit per dollar donated decreases compared to current rules.    

New Charitable Deduction Benefits for Non-Itemizers Starting in 2026

Beginning next year, taxpayers who claim the standard deduction – approximately 90% of all filers according to IRS data – will gain access to a new charitable contribution deduction previously unavailable to them.

Above-the-Line Deduction Structure Non-itemizers can claim deductions for cash charitable donations up to $1,000 for single filers and $2,000 for married couples filing jointly. Important limitations: only cash contributions qualify, and these thresholds are not indexed for inflation, meaning they remain fixed regardless of future economic conditions.

Historical Precedent Shows Significant Impact This provision mirrors the temporary deduction available during the COVID-19 pandemic in 2020 and 2021, which allowed $300 for single filers and $600 for joint filers. That earlier program demonstrated substantial success in encouraging charitable giving among smaller donors.

IRS Statistics of Income data revealed that more than 42 million additional taxpayers utilized the pandemic-era deduction, generating nearly $11 billion in increased charitable contributions during 2020 alone. The Fundraising Effectiveness Project documented that donations under $250 grew by 15.3% in 2020 compared to 2019, while $300 gifts – precisely matching the deductible amount – surged by 28%.

Strategic Implications For non-itemizers, delaying charitable contributions until 2026 when this deduction becomes available may provide tax benefits that don’t exist under current law. This represents a reversal of the strategy recommended for itemizers, who benefit from accelerating donations into 2025.

The timing implications are clear: itemizers may want to accelerate planned charitable giving into 2025 to capture deductions under the more favorable current rules before these restrictions take effect.

Strategic Timing for Charitable Donations Under New Tax Rules

Itemizers: Accelerate Giving Into 2025

Itemizers can circumvent the new 0.5% AGI floor by concentrating charitable donations in the current year, allowing them to deduct their entire contribution rather than only amounts exceeding the threshold.

High-net-worth donors should particularly consider bunching – consolidating multiple years of planned giving into 2025 – to avoid the reduced 35% cap on itemized deductions that replaces the current 37% benefit.

The Financial Impact Illustrated

Consider a high-income filer with $1 million AGI donating $20,000:

Donating in 2026:

• The 0.5% AGI floor eliminates $5,000 from deductibility
• The remaining $15,000 receives only a 35% tax benefit
• Total tax savings: $5,250

Donating in 2025:

• The full $20,000 qualifies for deduction
• Current 37% tax benefit rate applies
• Total tax savings: $7,400
• Additional savings by acting in 2025: $2,150

Non-Itemizers: Delay Until 2026

Non-itemizers should employ the opposite strategy and postpone cash donations until 2026 when they become eligible for the new above-the-line deduction. Contributions made in 2025 generate no tax benefit for standard deduction filers. If you have any questions feel free to reach out.