Charitable giving can make you feel good about supporting causes you care about. It can also have important tax benefits. The new tax act passed in July 2025 made some important changes to the tax provisions for charitable contributions, which could make it more beneficial for people who itemize to consider giving this year, as they may see some reductions in the amounts they can deduct in the future. In contrast, non-itemizers could see greater tax benefits in future years.
While most of the changes go into effect for tax year 2026, the tax legislation introduces 3 new provisions that could significantly influence decisions on charitable giving strategies, offering both expanded opportunities and important considerations for donors to think about in the current tax year.
Here’s a look at the 3 changes.
New tax provisions introduced by the tax law
1. Above-the-line charitable deductions for non-itemizers. Beginning in the 2026 tax year, a reinstated deduction allows non-itemizers to deduct cash donations to charity—up to $1,000 for single filers or $2,000 for married couples filing jointly. This provision is permanent and is not indexed for future inflation. Further, some types of donations are ineligible for the deduction, including those to donor-advised funds or private non-operating foundations.
This change could potentially encourage people who take the standard deduction to make charitable contributions. Since the Tax Cuts and Jobs Act (TCJA) of 2017 increased the standard deduction, only about 10% of households have itemized deductions instead of claiming the standard deduction, according to the most recent data,1 making them ineligible for charitable giving tax deductions. With the introduction of this above-the-line deduction, all households are now eligible to receive a tax deduction for qualified charitable contributions, potentially increasing participation in giving.
2. New floor on deductions for itemizers. Effective for the 2026 tax year, itemizers who make charitable contributions will only be able to claim a tax deduction to the extent that their qualified contributions exceed 0.5% of their adjusted gross income (AGI). That means a formerly fully deductible charitable contribution now must be reduced by 0.5% of an individual’s contribution base for the tax year.2
For example, in 2026, a couple with an AGI of $300,000 who itemized could only deduct charitable donations in excess of $1,500.
High-income individuals who itemize deductions might want to consider the timing and amounts of their giving, and the strategies to maximize their deduction. For instance, a bunching strategy, or an approach of making larger gifts with less frequency, could potentially be more effective under the new rules. Donors who itemize may want to think about accelerating their gift to 2025 to maximize their deduction before the new floor goes into effect.
3. New limits to deductions for itemizers in the top tax bracket. Also starting in the 2026 tax year, the new legislation caps the tax benefits of itemized charitable deductions at 35% for those in the 37% marginal tax bracket.
In other words, a high-income individual filer with a hypothetical AGI of $1 million who donates $20,000 would find that, due to the floor, $5,000 would not be deductible in 2026. Note: The floor and cap for high-income filers applies to itemized deductions only, not the cash donations of $1,000 for single filers and $2,000 for married joint filers who do not itemize, mentioned above.
Donors in higher tax brackets who itemize and are considering a philanthropic gift may want to think about accelerating their gift in 2025 to maximize their deduction under the current tax law before the new cap goes into effect.
Key takeaways and considerations
In light of the 2025 tax law changes, donors should take a fresh look at their charitable giving strategies to ensure they are maximizing both impact and tax efficiency. The introduction of the charitable deduction for non-itemizers may expand participation in giving, while high-income donors may face reduced value from charitable deductions in the future. All of this could make 2025 a potentially strategic time to give. Donors and their advisors should consider:
- Timing of contributions – Accelerating contributions in 2025, perhaps using a bunching strategy, may yield greater tax savings. A donor-advised fund, like the Fidelity Charitable® Giving Account®, may be worth considering for this purpose.
- Planning ahead for 2026 to potentially make cash donations if they do not itemize, to take advantage of the new above-the-line deduction.
- Thinking beyond cash – A mix of cash and non-cash gifts may lead to greater impact as the legislation introduces new complexities and considerations for itemizers.
Also consider working with a trusted financial professional. Donors should engage with a tax professional or financial advisor to tailor a plan that aligns with their values and goals.