News & Insights

Charitable giving may offer a tax benefit even if you don’t itemize deductions on your federal income tax return. Beginning with the 2026 tax year, new provisions under the One Big Beautiful Bill Act (OBBBA) change how individuals and corporations can deduct charitable contributions.  

Understanding these changes, along with the documentation requirements that continue to apply, can help taxpayers plan their giving and prepare for the upcoming tax filing season.  

What Changed for Individual Taxpayers?  

The Tax Cuts and Jobs Act (TCJA) of 2017 significantly increased the standard deduction, making itemizing less beneficial for many taxpayers. As a result, charitable contributions often provided no additional federal income tax benefit for individuals whose total itemized deductions were less than the standard deduction.  

The OBBBA introduces a new deduction for certain cash charitable contributions, allowing eligible taxpayers to receive a tax benefit without itemizing deductions.  

Beginning with the 2026 tax year, eligible taxpayers who claim the standard deduction may deduct qualifying cash contributions of up to:  

You can take this deduction in addition to the standard deduction. However, several restrictions apply.  

Which Contributions Qualify?  

To qualify for the new deduction, contributions generally must:  

For 2026, the standard deduction amounts are:  

These amounts help determine whether itemizing or claiming the standard deduction is more beneficial.  

A New Limitation for Itemized Charitable Contributions  

Taxpayers who itemize deductions face another change beginning in 2026: a new charitable contribution floor equal to 0.5% of adjusted gross income (AGI).  

Under this rule, charitable contributions are generally deductible only to the extent they exceed 0.5% of the taxpayer’s AGI, subject to applicable charitable deduction rules and limitations.  

For example: Assume a taxpayer has an AGI of $150,000 and makes $2,000 in qualifying charitable contributions during the year. The 0.5% floor equals $750 ($150,000 × 0.5%).  

If the taxpayer itemizes deductions, the amount potentially deductible after applying this floor would be $1,250 ($2,000 − $750), assuming the contributions are otherwise eligible and no additional limitations apply.  

This change makes it important for taxpayers who itemize to understand how their charitable giving fits into their overall tax planning strategy.  

What Changes for C Corporations?  

The OBBBA also introduces a new limitation for C corporations claiming charitable contribution deductions beginning in 2026.  

Under the new rules, charitable contributions are generally deductible only to the extent they exceed 1% of the corporation’s taxable income, calculated before the charitable contribution deduction. Other existing limitations continue to apply.  

Corporations that regularly make charitable contributions should evaluate how this change may affect their tax position and consider incorporating it into their year-end tax planning.  

Businesses should also distinguish charitable gifts from payments made for advertising, promotion, or sponsorship arrangements. Depending on the facts and circumstances, certain business-related payments may qualify as ordinary and necessary business expenses rather than charitable contributions. The applicable tax treatment and limitations can differ.  

Charitable Contribution Rules That Still Apply  

Although the 2026 changes affect how certain contributions are deducted, several longstanding requirements remain important for individuals and businesses.  

Keep Written Documentation  

Maintaining appropriate documentation is essential to substantiating charitable contribution deductions.  

For individual contributions of $250 or more, taxpayers generally must obtain a contemporaneous written acknowledgment from the charitable organization. The acknowledgment should describe the contribution and indicate whether the organization provided any goods or services in exchange.  

For contributions below $250, taxpayers generally still need a receipt or other reliable record. Additional documentation requirements may apply depending on the contribution type and amount.  

Taxpayers should obtain and retain appropriate documentation rather than relying solely on bank statements or payment records when a charitable acknowledgment is required.  

Confirm the Organization Qualifies  

Not every payment made for a charitable purpose qualifies for a federal charitable contribution deduction.  

Eligible organizations generally include qualifying charities described in Internal Revenue Code Section 170(c), which include Section 501(c)(3) organizations. Contributions to individuals or families through crowdfunding campaigns, including many GoFundMe campaigns, generally are not deductible as charitable contributions.  

Before contributing with the expectation of receiving a tax deduction, confirm that the recipient’s organization qualifies.  

Understand Payments for Events and Games of Chance  

Payments made in exchange for raffle tickets, lottery entries, or other games of chance generally are not deductible as charitable contributions to the extent the payment is made in exchange for the chance to win a prize.  

Similarly, when a charitable event provides meals, entertainment, or other benefits in exchange for payment, only the portion that exceeds the fair market value of the benefits received may qualify as a charitable contribution, subject to applicable rules.  

Consider the Tax Treatment of Business Sponsorships  

Businesses may support charitable organizations through sponsorships, event participation, and promotional arrangements. Depending on the payment and the benefits received, some expenses may qualify as advertising or marketing expenses rather than charitable contributions.  

The distinction matters because business expenses and charitable contributions are subject to different tax rules and limitations. Businesses should maintain documentation that clearly describes the arrangement and consult their tax advisor when the appropriate classification is uncertain.  

Plan for Your 2026 Tax Return  

The charitable contribution provisions taking effect in 2026 may change the tax benefits available to individuals and businesses that support charitable organizations. Whether you claim the standard deduction, itemize deductions, or make contributions through a corporation, understanding the applicable requirements can help you make informed decisions.  

As you plan your charitable giving, keep accurate records, confirm that recipient organizations qualify, and consider how the new limitations may affect your tax situation.  

Have questions about charitable contribution deductions or your 2026 tax planning strategy? Contact the Maner team to discuss how these changes may affect you or your business.