The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025 changes some of the charitable deduction rules moving into 2026. Roaring back is a deduction for non-itemizers, which encompasses most of our readers since less than 10% of taxpayers itemize deductions. This will apply to cash contributions only that are made directly to public charities (a donor-advised fund will not qualify). The limit is a potential $1,000 for single taxpayers and $2,000 for those who are married and file a joint tax return. This is a below-the-line deduction, meaning it reduces taxable income but does not lower the taxpayer’s adjusted gross income (AGI).
Also, on the positive side, the up to 60% AGI limit for charitable deductions for cash contributions was made permanent. This includes gifts to donor-advised funds and public charities. Thankfully, this will not expire on 12/31.
On the negative side, the bill establishes a .5% of AGI floor for itemized charitable deductions starting in 2026. If you itemize your deductions, 2025 may be a better time for you to make gifts, as this new rule will kick in next year. Only those charitable contributions that are above .5% of a taxpayer’s AGI will be eligible for deductibility. There are carry-over rules that can apply, but this is a change for most itemizers who deduct every charitable contribution.
As always, for your gift planning needs, reach out to MMFA, and we would be thrilled to help. Call or email Chris for a consultation today.
