OBBBA - Charitable Contribution
Starting in 2026, non-itemizers may deduct up to $1,000 ($2,000 MFJ) for cash charitable gifts, a new 0.5% AGI floor applies to itemized charitable deductions, and the 60% cash gift limit is made permanent. The whaling captain deduction limit also rises from $10,000 to $50,000.
Charitable Contribution Deduction Deduction for Non-Itemizers
Taxpayers who do not itemize deductions may claim a charitable contribution deduction of up to $1,000 ($2,000 for married filing jointly) for cash donations to qualified charities. This deduction applies beginning in the 2026 tax year.
60% Cash Contribution Limit Extended
The 60% limitation on cash contributions to qualified charities is made permanent. This provision was originally set to expire at the end of the 2026 tax year, reverting to 50%.
New 0.5% AGI Floor
Starting in the 2026 tax year, an individual taxpayer’s charitable contribution deduction (if itemizing) is allowed only to the extent the total contributions exceed 0.5% of AGI (calculated without regard to the charitable deduction).
Carryovers of contributions made in 2026 are subject to the 0.5% floor, but carryovers of contributions made before 2026 are not.
Example — New AGI Floor In 2026, Hector has AGI of $100,000 and makes $4,000 of contributions to qualified charities. He may deduct only up to $3,500.
Calculation: $4,000 – ($100,000 × 0.5%).
Planning Note
To avoid the 0.5% minimum, consider making larger contributions in 2025 before the rule applies.
Taxpayers age 70½ or older with IRAs may make Qualified Charitable Distributions (QCDs) directly from their IRA, which exclude the amount from income and are not subject to the 0.5% floor.
Ordering Rules
IRC §170 limits deductibility percentages depending on the type of gift and the recipient. The way the 0.5% minimum floor applies will vary accordingly. For example, gifts of capital gain property to private foundations are limited to 20%, while cash gifts to public charities are subject to the 60% limit. New IRC §170(b)(1)(I) provides the ordering rules for applying the 0.5% floor. By regulation, the floor is applied first to gifts subject to the lowest deduction percentages (e.g., the 20% or 30% limits).
Example —
AGI Floor Application with Ordering Rules If Hector donates $2,000 of capital gain property to a private foundation and $2,000 cash to a local public children’s hospital, the $500 AGI floor is applied first to the capital gain property. His charitable deduction is calculated as follows:
$2,000 capital gain property – $500 floor = $1,500
$2,000 cash contribution = $2,000
Total deduction = $3,500
Special Note: Native American Subsistence Whaling
Beginning in the 2026 tax year, the charitable contribution deduction limit for whaling captains engaged in subsistence bowhead whale hunting (as approved by the Alaska Eskimo Whaling Commission) increases from $10,000 to $50,000. Qualifying expenses include the purchase and maintenance of whaling boats, weapons, and equipment; providing food for the crew; and the storage and distribution of meat taken in such activities.