Charitable Giving: How To Manage Donations With New Tax Laws

Authored by Javier Simon via The Epoch Times (emphasis ours),

When you donate to qualified charitable organizations under the IRS, you could get some tax benefits in the form of charitable deductions.

But tax laws are constantly changing, and the One Big Beautiful Bill Act (OBBBA) has brought some major changes to charitable deductions beginning in tax year 2026. These shifts affect both itemizers and those who take the standard deduction.

So let’s take a closer look.

Non-Itemizer Deduction

Normally, charitable deductions mostly benefit those who itemize their deductions. But beginning in tax year 2026, those who take the standard deduction can also deduct up to $1,000 worth of cash gifts to qualified operating charities if filing single or $2,000 if married and filing jointly.

However, this particular deduction doesn’t apply to contributions to donor-advised funds.

For tax year 2026, the standard deduction increased to $16,100 for single filers and $32,200 for married couples filing jointly. These figures will be adjusted annually for inflation.

These are historically high standard deduction levels made permanent through the OBBBA, so you may want to check if your total itemized deductions exceed the standard deduction.

Charitable Deduction ‘Floor’

For tax year 2026 and on, itemizers can only deduct the portion of their total donations that exceed 0.5 percent of their adjusted gross income (AGI).

So, if your AGI is $100,000, only the value of donations above $500 would be deductible. That $500 is the “floor.” For example, if an individual with an AGI of $100,000 donated $700 to an IRS-qualified children’s hospital, only $200 would be deductible ($700 – $500 = $200).

In other words, smaller donations may not generate as robust a tax benefit—or any at all in some cases. To get around this, many advisers recommend “bunching” several years of planned donations in one tax year to clear the floor.

New Cap for High Earners

If you’re in the highest tax bracket of 37 percent, the tax savings of your charitable deductions are capped at 35 percent. This means that if you’re in that tax bracket, a $20,000 donation would get you $7,000 in tax savings rather than $7,400 at 37 percent.

But there are many ways you can reduce your taxable income. For example, you can maximize pre-tax accounts like 401(k)s, IRAs, and HSAs. Such moves could move you to lower tax brackets.

The 60 Percent Cap Is Permanent

You can deduct cash gifts made to qualified charities up to 60 percent of your AGI. However, you must first clear the 0.5 percent floor.

New QCD Limits

A qualified charitable distribution (QCD) allows individuals aged 70 1/2 or older to donate up to $111,000 in 2026 to a qualified charity directly from a traditional IRA—and that charitable distribution won’t count toward your taxable income.

Plus, your QCD can satisfy your required minimum distribution (RMD). RMDs are certain amounts of money most people must annually withdraw from their traditional IRAs once they reach age 73, even if they don’t need it.

But by the time you reach 73, you may have grown a sizable nest egg. RMDs are partially calculated based on your IRA balance. So if it’s large enough, it can bump you into a higher tax bracket. It may even trigger net investment income tax and surcharges on your Medicare Part B and Part D premiums through what’s known as the income-related monthly adjustment amount.

So having your QCD satisfy your RMD can be quite beneficial. But remember, there are limits to QCDs, so if your RMD for 2026 is larger than $111,000, the difference would still be taxable. In other words, your QCD can partially or fully satisfy your RMD.

The Bottom Line

Charitable giving is a key component in the financial plans of many individuals. It not only allows them to contribute to the causes they care about but also earns people tax breaks. However, tax laws often fluctuate. The OBBBA is a sweeping law that brought major changes to charitable deductions, so it’s important to discuss your philanthropic goals for the year with a qualified tax adviser.

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