The One Big Beautiful Bill Act introduced significant changes to the tax code, including alterations to charitable giving that may affect you. Here are the essential updates every donor should be aware of:

 

NEW Universal Charitable Deduction

Most Americans take the standard deduction and do not itemize, which previously meant they couldn't deduct charitable donations. However, the temporary Universal Charitable Deduction was introduced in 2020, allowing non-itemizers to deduct up to $150 (for single filers) or $300 (for joint filers). The Big Beautiful Bill has now made this deduction permanent, increasing the limits to $1,000 for single filers and $2,000 for joint filers.

 

NEW 0.5% AGI Floor

For those who itemize their returns, a new requirement mandates that contributions must exceed 0.5% of their Adjusted Gross Income (AGI) to qualify for a deduction.

 

Individuals who want to itemize but give below this threshold may consider "bunching" their donations by combining multiple years’ contributions into a single year.

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NEW 35% Cap on Itemized Deduction Value

One of the most significant changes is the cap on the value of itemized deductions for high-income individuals. For those in the 37% tax bracket, the deduction value will be capped at 35%.

 

For instance, currently, a $10,000 donation yields tax savings of $3,700; however, starting in 2026, that amount will decrease to $3,500.

 

This 2% change could be substantial for wealthy donors, prompting strategies that offer tax benefits outside of charitable deductions.

 

EXTENDED 60% AGI Limit for Cash Gifts

This bill permanently extends the 60% AGI limit on cash contributions to qualified charities, allowing itemizers to deduct a larger portion of their income through charitable giving annually. This is particularly beneficial for those making substantial one-time donations or planning multi-year philanthropic strategies, especially when combined with the 30% AG limit for gifts of appreciated assets.

 

NEW 1% Floor for Corporate Partners

Beginning in 2026, corporations will only be able to deduct charitable contributions that exceed 1% of their taxable income. While the existing 10% AGI cap on corporate charitable deductions remains in place, a new floor has been established. Small businesses, whose contributions often fall below this threshold, may need to consider "bunching" donations to qualify for deductions.