Charitable Giving in 2026: What the New Rules Mean for Your Philanthropy and Beyond

Surprise! The rules have changed again. If you’re planning to donate to charities in 2026 or beyond, there are some big changes. The One Big Beautiful Bill Act (OBBBA) has modified some key tax provisions related to charitable giving. Starting this year, almost every American taxpayer will see a shift in how charitable contributions are deducted on federal tax returns. These changes will affect both individual and corporate donors, making it important to rethink your giving strategies to maximize your tax benefits. In short, some taxpayers will see increased tax benefits for charitable gifts while others may find their deductions reduced. Below we break down the good, the bad, the just plain annoying aspects of some of these new rules, and what they can mean for you.

The Good News:

Above the line charitable deductions for non-itemizers. The OBBBA allows single filers who do not itemize to deduct up to $1,000 in qualifying donations. For married filing jointly filers the limit is $2,000. With recent increases to the standard deduction, most filers haven’t been able to claim charitable deductions as you were required to itemize to capture the benefit.

The Bad News:

A new tax floor for deductions and capped bracket rate. The OBBBA creates a tax floor for taxpayers who itemize and make charitable contributions. Only qualified contributions greater than 0.5% of their adjusted gross income (AGI) are eligible for deduction. Meaning that if you had $400,000 in AGI, your first $2,000 worth of charitable deductions wouldn’t be eligible. In addition, for those in the 37% tax bracket, the OBBBA caps the benefit to a 35% deduction. 

If you’re a business owner, it’s also important to know that the OBBBA has changed the rules for corporations who are now only entitled to deduct charitable contributions that exceed 1% of their taxable income.

The Annoying News:

Figuring out what gifting strategy will be most effective. While the new rules may make things a little more complex, there are strategies that remain useful. 

1. “Bunching” with Donor-Advised Funds (DAFs):  Instead of making smaller annual donations and missing out on deductions each year, you can “bunch” several years’ worth of contributions into a single tax year. This approach allows you to surpass the 0.5% floor once in that high-giving year, and you can distribute the funds from your DAF to charities over the next handful of years.
2. Qualified Charitable Distributions (QCDs): If you are age 70 ½ or older, QCDs remain a great option. Since QCDs go directly from your IRA to a charity, they are never included in your AGI calculation. This allows you to bypass the 0.5% floor, the 35% cap, and still satisfy your Required Minimum Distribution (RMD) tax-free.

Although the OBBBA may require a transition from reactive giving to a more deliberate approach, it remains possible to maintain a tax-efficient philanthropic strategy. For more information on how these changes affect you, contact us, through our website, call (585) 381-4180, or email us at info@armbrustercapital.com.

Disclaimer: Armbruster Capital Management’s views as portrayed in this post are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Investing involves risks, and the value of your investment will fluctuate over time, and you may gain or lose money. Past performance is no guarantee of future results.