H.R.1 – Two Changes for Charitable Contributions Starting in 2026

Currently taxpayers need to itemize their deductions to benefit from charitable donations. For a brief period during COVID-19, a temporary charitable deduction was allowed for non-itemizers.  Section 70424 of H.R.1 restores this deduction permanently and increases the deduction amounts.

Starting in 2026, single filers can deduct up to $1,000 and joint filers can deduct up to $2,000 of qualifying charitable contributions.  To qualify, contributions need to be monetary donations (i.e. not household goods or marketable securities) gifted directly to the charity.  Donations to a donor-advised fund are not eligible.  This deduction is not subject to the 0.5% floor described below.

Beginning in 2026, taxpayers who itemize their deductions will have a new floor for determining deductible charitable contributions.  There will be a 0.5% Adjusted Gross Income (AGI) floor reducing deductible charitable contributions.

The current limitations that exist (e.g. cash donations are deductible up to 60% of AGI) are still valid, and they apply after the 0.5% AGI floor is calculated.

For an example of how this will work, if a taxpayer has $100,000 of adjusted gross income and donated $5,000 to charity, then the allowed deduction to report on Schedule A for itemized deductions will be reduced to $4,500 ($100,000 * 0.5% = $500 reduction).