How the 2026 charitable deduction floor works

For taxpayers who itemize, the OBBBA introduces a permanent floor: only charitable contributions exceeding 0.5% of your AGI are deductible. This isn't a one-time threshold — it applies every single year, on every dollar of giving, regardless of how generous you are. A donor with $20,000 of giving and $400,000 of AGI loses the first $2,000 (0.5% of $400,000); only the remaining $18,000 is even eligible for a deduction.

Non-itemizers get a new deal entirely

If you take the standard deduction, the 0.5% floor doesn't apply to you at all. Instead, starting in 2026 you can claim a brand-new above-the-line deduction of up to $1,000 (single) or $2,000 (married filing jointly) for cash gifts to qualifying public charities — on top of your standard deduction. It only covers cash gifts (not stock, property, or donor-advised fund contributions), the amounts are fixed and won't rise with inflation, and there's no carryforward for unused amounts.

The 35-cent cap for top-bracket itemizers

There's a second new limit that stacks on top of the floor: taxpayers in the 37% bracket only get a 35-cent deduction value per dollar given, not 37 cents — a small but real haircut on large gifts from high earners, similar in spirit to the old "Pease limitation."

Bunching becomes more valuable

Because the floor applies every year, donors who give close to or below 0.5% of AGI annually may get little or no benefit from itemizing their charitable gifts at all. "Bunching" — combining two or three years of planned giving into a single tax year, often through a donor-advised fund — clears the floor once instead of repeatedly losing the same slice each year. Model the broader tax picture with the income tax calculator and see how itemizing compares to the standard deduction using the budget planner.