Beginning in 2026, the One Big Beautiful Bill Act (OBBBA) changes how charitable gifts are treated for tax purposes. These updates affect both taxpayers who take the standard deduction and those who itemize, and they also create new rules for Donor-Advised Funds (DAFs) and private foundations.
For Taxpayers Who Take the Standard Deduction
- Starting in 2026, you can deduct up to $1,000 (single filers) or $2,000 (married filing jointly) in cash gifts to public charities — even if you don’t itemize.
- This is new! Previously, standard deduction filers didn’t receive any tax break for charitable gifts.
- Gifts to Donor-Advised Funds or private foundations don’t qualify for this new deduction — it only applies to gifts of cash made directly to eligible public charities.
For Taxpayers Who Itemize Deductions
Itemizers can still deduct charitable gifts, but the OBBBA adds two new limits:
- 0.5% of AGI floor — The first 0.5% of your adjusted gross income given to charity doesn’t count toward a deduction.
- 35% benefit cap — The tax savings from charitable giving can’t exceed 35% of the gift’s value, even for those in higher tax brackets.
The usual 60% of AGI limit for cash gifts to public charities remains in place.
For example, if your adjusted gross income (AGI) is $200,000, you can generally deduct up to $120,000 (60% of AGI) in cash contributions to public charities in a single year. Any additional amount can usually be carried forward and deducted over the next five years, subject to the same cap & floor.
Donor-Advised Funds (DAFs)
- Non-itemizers: DAF gifts don’t qualify for the new $1,000/$2,000 deduction.
- Itemizers: You can still deduct gifts to DAFs, but the new floor and benefit cap reduce the overall tax advantage.
Planning tip: If you plan to fund a DAF, consider making the contribution before 2026 to use the current (more favorable) deduction rules for Donor Advised Funds.
Private Foundations
- Non-itemizers: Gifts to private foundations are not eligible for the new below-the-line deduction.
- Itemizers: Contributions remain deductible but are affected by the 0.5% floor and 35% cap.
In short: Private foundations still work for long-term philanthropy, but they’ll offer less immediate tax benefit after 2025.
Planning Takeaways
- Big donors should plan now: Consider giving strategies including opening or contributing to funding a DAF in 2025 to benefit from the current tax provisions.
- The new deduction lets non-itemizers get some tax credit for generosity.
Reach out to your tax advisor or your Becker Capital financial planner to make sure your charitable strategies align with your goals considering these changes.
Bottom Line
The OBBBA simplifies things for casual givers — but tightens the rules for larger, itemized donations. With smart timing and planning, you can keep your giving impactful while staying tax-efficient under the new law.