9/28/2026 - By Michael Cole, JD, MSPA & Stacey Craig, CPA
Starting in 2026, the tax rules for charitable giving get a little less generous, and a lot more “it depends.” The deduction isn’t going away, but smaller gifts may not move the needle on your taxes unless your total giving clears new minimum thresholds. Below is a plain-English guide to what’s changing for individuals, businesses, and nonprofits (plus a few practical takeaways).
For tax years starting after December 31, 2025, here are the headline changes:
Think of the new rules as adding a “minimum giving threshold” before the tax deduction kicks in. After you clear that threshold, the familiar percentage limits and documentation rules still apply.
If you’re an individual donor
The new idea is if you itemize, you generally can’t deduct the first 0.5% of your AGI that you give to charity each year. Only the amount above that “floor” counts toward your itemized charitable deduction.
For example, if your AGI is $500,000, the floor is $2,500. If you donate $2,500 total, you get no charitable deduction for it. If you donate $12,500 total, you’re generally starting with a $10,000 deduction (subject to the usual percentage limits and documentation rules).
What’s AGI? For most people, it’s basically your income on your tax return before itemized deductions used here as the yardstick to calculate that 0.5% floor.
Two other individual rules to know:
If you’re a corporation (or advising one)
The new idea is that corporate giving now has a “floor” too. In general, a corporation only gets a charitable deduction for the amount of total gifts that is over 1% of taxable income, and the total deduction still can’t exceed 10% of taxable income (with special rules for certain donations).
Why this matters if corporate gifts don’t clear the 1% floor, that “below-the-floor” slice may be lost in many common situations. Carryforwards still exist, but the rules now track amounts blocked by the 1% floor separately from amounts blocked by the 10% cap.
Another limitation on itemized deductions returns in 2026. Translation: even when your charitable gifts are deductible, the tax value of that deduction can be reduced for higher-income households. If you’re in a top bracket, don’t assume “deductible” automatically means “full-value.”
Small, steady gifts may stop being “deductible” (for itemizers)
The 0.5% floor means you may get zero charitable deduction until your total giving clears that threshold. Example: at $500,000 AGI, the first $2,500 of gifts doesn’t count for the deduction; at $2,000,000 AGI, the first $10,000 doesn’t count.
If you usually give “a little each year,” you may see a smaller (or no) federal tax benefit unless your annual total is high enough to clear the floor by a meaningful amount.
Carryforwards matter more (but they’re not automatic)
Some “disallowed this year” gifts can carry forward to future years, but the new floor makes the details more important. In plain terms:
Cash gifts to qualifying public charities remain comparatively straightforward because the 60% limit is permanent. Still, the overall math is now affected by the new 0.5% floor, how your gifts fall into different percentage “buckets,” and the returning itemized deduction limitation for higher-income taxpayers.
If you don’t itemize, the deduction is small (but real)
Non-itemizers may be able to deduct up to $1,000 ($2,000 joint) for cash gifts to certain public charities. It won’t cover big philanthropic plans, but it’s a welcome nudge for everyday giving.
Section 170(p) gives nonitemizers a deduction for cash gifts up to $1,000 ($2,000 joint), but only for gifts to Section 170(b)(1)(A) organizations and not to supporting organizations or donor advised funds. This helps smaller donors who do not itemize, but the deduction is capped and limited to cash gifts.
The IRS didn’t get any more forgiving. Keep your receipts and follow the rules, especially for bigger gifts and anything noncash.
The first 1% may be “no deduction this year”
For many corporations, the new 1% floor means the first slice of annual giving may not be deductible. If the company’s total gifts don’t exceed the usual 10% cap (and therefore don’t create carryforwards), that below-the-floor amount can be effectively lost.
Practical implication: “Same gift every year” strategies may need a rethink if the business keeps losing the first 1% annually.
Carryforwards can help—but only in the right fact pattern
As a rule of thumb, carryforwards show up when the company gives enough to run into the upper limit (the 10% cap). If you never get near that cap, the floor may just keep shaving off deduction value each year.
Special donation programs may have special rules
Some contributions (like certain food inventory donations) have their own limits and may interact differently with the new corporate floor. If a company relies on a special giving program, it’s worth getting tax advice on the exact mechanics.
Double-check whether a payment is “charity” or “business”
Some payments to nonprofits are really charitable gifts, while others might qualify as ordinary business expenses depending on the facts (for example, when there’s a clear business purpose and a reasonable expectation of return). The new 1% floor makes correct classification more important—so document the “why” behind the payment.
Giving may get lumpier. Because donors may need to clear new “floors” to see a tax benefit, some nonprofits may see fewer small deductible gifts and more big “bunched” gifts in select years.
Some donors may favor public charities over other vehicles
Because the 60% cash limit and the non-itemizer cash deduction are both tied to certain public charities, some donors may lean toward giving directly to those organizations rather than through donor-advised funds or supporting organizations (depending on their situation).
Receipts and documentation become part of the donor experience
As deductions get harder to “unlock,” donors tend to be more sensitive to acknowledgments, timing, and valuation support. Fast, accurate receipts and clear gift acceptance guidelines can make giving feel easier—and safer—for donors.
The IRS challenge articles show active scrutiny of:
Smart (and simple) ways to plan your giving
Still true in 2026: the rules you can’t ignore
If you want the tax benefit, assume the IRS will care about the details, and plan your giving like you plan everything else: early, documented, and with clear goals.
In 2026, charitable giving still “counts” but the tax payoff is more sensitive to how much you give, when you give, and how you give. For individuals, the new 0.5% AGI floor means smaller annual gifts may not create a deduction. For corporations, the 1% floor can shave off deduction value year after year unless the company’s giving pattern triggers carryforwards. For nonprofits, that can translate into lumpier donations and more donor questions about receipts and timing.
With changes to the tax treatment of charitable giving in 2026, thoughtful planning can help you make informed decisions about your charitable contributions and maximize the potential tax benefits available to you. Whether you’re an individual donor, business or nonprofit, our Tax team can help you understand how the new rules may affect your giving strategy and plan ahead. Contact the Saltmarsh Tax team today to discuss your charitable giving and tax planning needs.
About the Authors
Michael is a partner with experience across tax, accounting, and advisory services. He began his career in public accounting over 15 years ago, focusing on tax consulting and compliance. His primary areas of experience include providing services related to mergers and acquisitions, 704(b) allocations, and complex transaction structuring for private equity firms and family offices.
Stacey is a partner with experience across tax compliance, planning, and consulting services. Stacey is a trusted tax advisor known for delivering clear, strategic guidance that helps clients make confident financial decisions. With more than two decades of experience in tax compliance, planning, and consulting, she brings deep expertise to partnerships, S corporations, nonprofits, high-net-worth individuals, trusts, and estates.