Back to News
George F. Bearup, J.D. Senior Legal Trust Advisor

March 11, 2026

Charitable Giving in 2026: The Good, the Bad, and the Ugly

The One Big Beautiful Bill Act, OB3, made significant changes to charitable giving, and the income tax deductions that often motivate a charitable gift. Those changes impact what to give and how the gift is made.

A Quick Summary

A quick summary of the good, the bad, and the ugly of those new tax rules applicable to charitable gifts follow.

Standard Deduction: The standard deduction claimed by most individuals and married couples increases in 2026. The standard deduction is $16,100 for an individual and $32,200 for a married couple. While a few more individuals might itemize their tax deductions in 2026 due to the deductions for tip earnings, overtime earnings, seniors over age 65, the interest paid on certain auto loans, and qualified business income for small businesses, most Americans will continue to claim the standard deduction. Consequently, most charitable gifts will not be deductible, with one important exception.

Cash Gift Deduction Limit: The Act fortunately makes permanent the rule under the 2017 Tax Act that a donor can contribute cash to charities up to 60% of the donor’s taxable income for the year. Any cash gift to a charity that is above the 60% income ceiling can be carried over and used by the donor during the following five tax years.

Above-the-Line Cash Gifts: The Act creates a new $1,000 charitable deduction for gifts of cash to 501(c)(3) charities by an individual, ($2,000 for a married couple). This income tax deduction is available even if the taxpayer claims the standard deduction and does not itemize his or her tax deductions. Note that only a gift of cash is available for this above-the-line charitable deduction. In addition, some charities like donor advised funds, private foundations and ‘supporting’ organizations (of other charities) are ineligible to receive this deductible contribution.

Charitable Deduction Limits: While it is nice to see that non-itemizers will be able to deduct up to $1,000 for their cash gifts to charity, unfortunately, there also are some limits to those taxpayers who itemize their deductions.

Individuals: To begin with, an individual who donates to charity and itemizes his or her charitable deductions will be disallowed 0.5% of their charitable deduction. For example, if the donor has adjusted gross income of $200,000 for the year, only a portion of the donor’s charitable giving above $1,000 [0.5% x $200,000 = $1,000] will be deductible on her 2026 income tax return. 0.5% of the donor’s charitable gift will not deductible.

High Earners: Similarly, high earning individuals also face a limit on the amount of their deductions, including their charitable deduction. Under the Act, only 35/37 of a charitable gift can be deducted by a high earner who is in the 37% marginal federal income tax bracket. By way of example, if the donor is in the marginal 37% federal income tax bracket only 35/37th of their contribution will be deductible, so that if the donor makes a $10,000 gift to charity, only $3,500 of that gift will be deductible by the donor, not $3,700.

Corporations: If a corporation makes charitable gifts, its charitable deduction is also limited in 2026. The corporation’s deduction is limited to a 1% floor; only the portion of the corporation’s charitable gift above 1% of the corporation’s taxable income will be deductible; the first 1% of the corporation’s income will not be reduced by a charitable gift. The Act also continues a previous limit to a corporation’s tax-deductible amount to 10% of the corporation’s taxable income.

Trusts and Estates: A trust or an estate finds itself in the highest marginal federal income tax bracket once its income exceeds $16,001 in 2026. The same 35/37 limit on deductions now applies to a trust or an estate, just like it does to a high earner, which was not the case prior to 2026. This change impacts an estate or trust that is directed by its terms to ‘pay all income to charity’. In the past, a ‘pay all income to charity’ direction permitted the trust or estate to offset its taxable income with a corresponding charitable deduction. Under the Act, with a ‘pay all income to charity’ direction, the trust or estate will still have income on which an income tax must be paid, but the trust or estate will not have any assets to pay the income tax liability, since the charity received all of its income. As a result of this change in tax law, fiduciaries who control trusts and estates will now have to evaluate whether to increase charitable giving to reduce exposure to tax liability, or reserve liquidity for the resulting income tax burden that they did not have to face prior to the Act.

Charitable Giving in 2026

Even after all of these changes as a result of the Act, there are still a couple of sound strategies available for charitable giving in 2026.

  • QCD: The qualified charitable distribution (QCD) rules were not changed by the Act. A donor age 70 ½ who transfers funds directly from their traditional IRA can gift up to $111,000 (in 2026) and not have the distribution included in their taxable income. However, the donor cannot deduct the QCD amount. A QCD will be treated as having satisfied, in whole or in part, the donor’s required minimum distribution (RMD) obligation for the tax year. Note, though, that a QCD cannot be used for distributions to a donor advised fund, nor a supporting organization (of another charity) or a private foundation.
  • Bunching Gifts: This strategy involves combining multiple years’ worth of charitable donations into a single tax year. This approach to charitable giving enables the donor to exceed the standard deduction threshold and itemize their deductions for larger tax benefits. This is when a large gift to a donor advised fund can work, since the gift to the donor advised fund is deductible in a single tax year, yet the gifts to charities can be spread over several tax years with the donor directing the fund’s grants.
  • Gifts of Stock: Since the stock market has been on a tear for several years now, many donors will currently hold highly appreciated stock in their portfolios. If the donor is charitably inclined, a direct gift of appreciated stock (or other long-term assets) to charity, which gifts will allow a full fair market-value charitable deduction if itemized while avoiding any capital gains tax. A gift of such stock to a donor advised fund enables a large charitable deduction in one year, i.e., a bunching, with some level of control on the grants made using the stock sales proceeds over the following years.