President Trump’s tax and spending package, enacted in July 2025, made significant changes to charitable deduction rules that took effect beginning in 2026. The legislation introduced new provisions affecting both itemizers and non-itemizers, creating a more complex tax landscape for charitable giving.
For taxpayers who do not itemize deductions, the legislation provides a new charitable tax break worth up to $1,000 for single filers and $2,000 for married couples filing jointly. This change allows non-itemizers to receive a tax benefit from cash donations to eligible organizations for the first time. Financial advisors note this provision benefits many donors who previously received no tax incentive for charitable contributions.
However, the legislation imposed two significant restrictions for households that itemize their deductions. Starting in 2026, itemizers must clear a deduction floor of 0.5% of their adjusted gross income before claiming any charitable deduction. Additionally, taxpayers in the highest federal income tax bracket face a cap on their charitable deduction at 35%, down from the 37% top marginal rate. These combined changes mean that income increases from bonuses, asset sales, or Roth conversions could substantially reduce the value of charitable deductions for affected taxpayers.
Tax professionals recommend several strategies to navigate the new rules. Donor-advised funds remain effective tools, allowing donors to “bunch” multiple years of contributions into a single year to exceed the deduction floor while distributing gifts gradually over time. Tax lot selection—choosing which specific assets to donate based on tax implications—also remains valuable. Experts suggest donating long-term capital gains assets held for more than one year rather than short-term holdings, as this approach provides greater tax benefits while avoiding capital gains taxes on appreciated investments. Financial advisors emphasize that proactive planning earlier in the year can help taxpayers maximize their charitable deductions under the new framework.
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