Short answer: 2026 is the first year the new charitable rules apply. Itemizers can only deduct contributions above 0.5% of AGI. Non-itemizers get a new deduction of $1,000 ($2,000 joint) for cash gifts. Corporations face a 1% of taxable income floor. And taxpayers in the 37% bracket now get roughly 35 cents of benefit per deductible dollar, not 37. Every one of these changes rewards bunching gifts into one year rather than spreading them evenly.
Four changes that took effect this year
The One Big Beautiful Bill Act (Pub. L. 119-21) rewrote the charitable rules, and almost all of it starts with tax years beginning after 2025. That means your 2026 return is the first one that sees it. Four provisions matter for most people:
| Change | Who it affects | Code |
|---|---|---|
| New deduction for non-itemizers: $1,000 / $2,000 joint | Anyone taking the standard deduction | §170(p) |
| New 0.5% of AGI floor | Individual itemizers | §170(b)(1)(I) |
| New 1% of taxable income floor | C corporations | §170(b)(2)(A) |
| Itemized deductions reduced by 2/37 in the top bracket | Taxpayers in the 37% bracket | §68 |
They pull in different directions, so the right move depends on which side of the standard deduction you land on.
If you do not itemize: the new $1,000 / $2,000 deduction
Most taxpayers take the standard deduction and, since 2021, have gotten nothing for their charitable giving. That changes in 2026. Section 170(p) allows a non-itemizer up to $1,000, or $2,000 on a joint return, for charitable contributions made during the year.
Three conditions are easy to miss:
- Cash only. Clothing, household goods, appreciated stock and volunteer time do not count here.
- Public charities only. The gift must go to an organization described in §170(b)(1)(A). Gifts to §509(a)(3) supporting organizations are excluded.
- No donor advised funds. Contributions to establish or maintain a DAF (§4966(d)(2)) do not qualify.
One technical point worth getting right: this is not an above-the-line deduction. It does not reduce your AGI. It is a below-the-line deduction allowed to non-itemizers in computing taxable income, sitting alongside the standard deduction through §63(b)(4). That distinction matters anywhere AGI drives another result — IRMAA surcharges, state add-backs, or a credit phase-out.
If you do itemize: the 0.5% floor
Section 170(b)(1)(I) is the change that will surprise people. Charitable contributions are now deductible only to the extent they exceed 0.5% of your contribution base — AGI computed without regard to an NOL carryback. Everything below that line is simply gone from the calculation.
| AGI | 0.5% floor | Gifts of $6,000 | Deductible |
|---|---|---|---|
| $150,000 | $750 | $6,000 | $5,250 |
| $400,000 | $2,000 | $6,000 | $4,000 |
| $1,000,000 | $5,000 | $6,000 | $1,000 |
The floor sits on top of, not instead of, the existing percentage ceilings. The 60% of AGI limit for cash gifts to public charities under §170(b)(1)(G) is now permanent, and the 30% and 20% categories for appreciated property are unchanged. The statute applies the floor after the percentage limits, working through the categories in a set order and reaching the 60% cash category last.
Now the part that costs money if you assume the old rules. Amounts knocked out by the 0.5% floor are not automatically carried forward for five years. Under §170(d)(1)(C), a floor-disallowed amount is added to your carryforward only if you already have an excess contribution carryforward for that year under one of the percentage-limit carryover rules. If your giving is comfortably inside the ceilings — which is true for most households — the amount below the floor is permanently lost.
That single sentence is the strongest argument for bunching. Giving $5,000 a year for three years crosses the floor three times and loses three floors. Giving $15,000 in one year and nothing in the next two crosses it once.
The top-bracket haircut on every itemized deduction
Section 68 is back, in a new form, for tax years beginning after 2025. It reduces otherwise allowable itemized deductions by 2/37 of the lesser of (a) those itemized deductions, or (b) the amount by which taxable income — computed without §68 and increased by the itemized deductions — exceeds the dollar figure where the 37% bracket begins.
The practical translation: a dollar of itemized deduction offsetting income taxed at 37% is now worth about 35 cents rather than 37. It is not a credit-style cap; it is a haircut on the deduction itself. And it applies after the §170 limits, so the order is: percentage ceilings, then the 0.5% floor, then the §68 reduction.
For a top-bracket donor deciding between giving in December 2026 or January 2027, this does not change much on its own — it applies in both years. What it does change is the arithmetic of giving cash versus appreciated stock, and whether a large gift is better routed through a donor advised fund in a single high-income year.
Corporations: a 1% floor and a 10% ceiling
For tax years beginning after December 31, 2025, §170(b)(2)(A) allows a corporation a charitable deduction only to the extent contributions exceed 1% of taxable income, and not more than 10% of taxable income. A corporation with $2 million of taxable income now gets nothing for the first $20,000 it gives.
The carryforward rules under §170(d)(2) are the same shape as before: amounts above the 10% ceiling carry forward five years, current-year contributions are used before carryovers, and carryovers come out FIFO. But the floor follows the same trap as the individual version — an amount disallowed by the 1% floor is preserved only in a year where contributions also exceeded the 10% ceiling. A corporation giving a modest amount each year loses the first 1% every single year.
The planning response is the same as for individuals, only with a board resolution attached: give in concentrated years rather than smoothing the budget across them.
If you are over 70½, the QCD is the strongest tool you have
A qualified charitable distribution sends money straight from an IRA to a charity. It is excluded from income under §408(d)(8) and is not claimed as a §170 deduction at all. For 2026 the inflation-indexed limit is $111,000 per taxpayer.
Because a valid QCD never enters the §170 system, the 0.5% floor does not touch it, the 60% ceiling does not apply, and §68 does not reduce it. It also satisfies your required minimum distribution while keeping the amount out of AGI — which protects everything that AGI drives, including Medicare premium surcharges.
The caution: the requirements are strict. If a distribution fails to qualify under §408(d)(8), it becomes an ordinary IRA distribution to you plus a §170 charitable contribution — and at that point the 0.5% floor and the percentage ceilings do apply. The transfer must go directly from the IRA trustee to the charity, and DAFs and supporting organizations are not eligible recipients.
What to do before December 31
- Run the floor. Multiply your expected AGI by 0.5%. If your planned giving is close to that number, you are getting little or nothing for it this year.
- Decide whether to bunch. Two or three years of giving in one year clears the floor once instead of repeatedly. A donor advised fund is the usual mechanism for bunching without dumping three years of money on a charity at once — but remember the DAF contribution does not qualify for the §170(p) non-itemizer deduction.
- Give appreciated stock, not cash, where you can. You avoid the capital gain and deduct fair market value, subject to the 30% category. See our guide on non-cash gifts over $5,000 and the appraisal requirement before you do.
- If you are 70½ or older, use the QCD first. It outperforms a cash gift for nearly every retiree who has an IRA.
- Get the substantiation now. A contemporaneous written acknowledgment is required for any single gift of $250 or more, and it must be in hand by the time you file. January is a bad time to be chasing a church office for a letter.
- Time the payment correctly. A check mailed on December 31 counts for 2026. A credit card charge made on December 31 counts for 2026 even if you pay the bill in January. A pledge does not count at all.
Charitable timing is one piece of a larger year-end picture. Our 2026 year-end tax planning guide walks through the rest of it entity by entity.
Frequently asked questions
Can I claim the $1,000 non-itemizer deduction and also itemize
No. Section 170(p) applies only to taxpayers who do not elect to itemize. If you itemize, your charitable giving goes through the normal §170 rules including the new 0.5% floor.
Does the 0.5% floor apply to gifts of appreciated stock
Yes. The floor applies to charitable contributions generally, not just cash. It is applied after the applicable percentage ceilings, and non-cash gifts sit in the 30% or 20% categories depending on the property and the recipient.
If the floor wipes out my deduction, do I get it back next year
Usually not. Under §170(d)(1)(C), an amount disallowed solely by the 0.5% floor is added to a carryforward only if you already have an excess contribution carryforward that year under a percentage-limit rule. If your giving is within the ceilings, the amount below the floor is lost permanently.
Does the new floor apply to a donor advised fund contribution
Yes. A contribution to a DAF is a §170 charitable contribution and is subject to the 0.5% floor and the percentage ceilings like any other gift. What a DAF contribution cannot do is qualify for the §170(p) non-itemizer deduction, and it cannot be the recipient of a qualified charitable distribution.
Where this leaves you
The 2026 rules are not hostile to giving, but they are hostile to habitual small giving by itemizers. The floor punishes a steady drip and rewards concentration; the non-itemizer deduction rewards modest cash gifts that previously got nothing; and the QCD sits outside all of it. Most households will land in one of those three lanes cleanly — the expensive mistake is staying in last year’s lane by default.
If you are weighing a large gift before December 31, or you are not sure whether bunching or a QCD is the better route for your situation, talk to us while there is still time to act on the answer.
