Charitable Giving Under the One Big Beautiful Bill Act: What’s Changing in 2026

Charitable giving has long been a core part of many families’ financial and estate plans. Beginning in 2026, the One Big Beautiful Bill Act (OBBBA) introduces several significant changes that affect how both individuals and corporations can claim charitable deductions. Understanding these rules will be critical as you consider the tax impact of your giving strategy going forward.

Below, we highlight the key changes and what they may mean for your planning.

Charitable Deduction for Non-Itemizers

Starting in 2026, taxpayers who do not itemize deductions will be able to claim a charitable deduction of up to $1,000 for individuals or $2,000 for couples filing jointly. This only applies to cash gifts made directly to qualified operating charities.

What this means:

• Roughly 90% of taxpayers who take the standard deduction may now benefit from some level of charitable tax relief.
• This provision makes smaller contributions more tax-friendly, although donor-advised fund (DAF) contributions are excluded from eligibility.

New Deduction Rules for Itemizers

For those who itemize, charitable deductions will look different:

Donations must first exceed 0.5% of adjusted gross income (AGI) before they qualify.
Example: If your AGI is $500,000, the first $2,500 of charitable gifts wouldn’t be deductible. A $10,000 gift would generate only a $7,500 deduction.

Deductions are also capped at 35%, even if you fall into a higher marginal tax bracket (such as 37%).
Example: a $10,000 gift that currently generates a $3,700 tax savings would be limited to $3,500 under the new cap.

What this means:

• Larger gifts will still qualify, but mid-level contributions from higher-income households may see reduced tax benefits.
• Donors may want to be more intentional about the size and timing of their gifts to ensure maximum tax impact.

New Floor for Corporate Giving

Corporate charitable deductions will also shift under the OBBBA:

• Contributions are deductible only to the extent they exceed 1% of taxable income, with the long-standing 10% cap remaining in place.
• Excess contributions above 10% can still be carried forward for up to five years.
• However, gifts below the 1% floor are nondeductible and can only be carried forward if a future year hits the 10% cap.

What this means:

• Companies with smaller or inconsistent giving programs may no longer receive the same tax benefit.
• Corporate donors may want to consider “bunching” contributions into a single year to cross the 1% threshold.

At-a-Glance: Current Law vs. OBBBA (2026)

Category	Current Law	OBBBA (2026)
Non-Itemizers	No charitable deduction available unless itemizing	Universal charitable deduction up to $1,000 (single) / $2,000 (married); excludes DAF contributions
Individuals Who Itemize	Full deduction of charitable gifts (subject to AGI % limits)	First 0.5% of AGI not deductible; deduction capped at 35% even if in higher bracket
Corporate Giving	Deductible up to 10% of taxable income (excess carried forward 5 years)	Deductible only above 1% of taxable income; still capped at 10% with 5-year carryforward
Education Scholarship Gifts	No federal credit	Beginning 2027: Nonrefundable credit up to $1,700 (or 100% of gift, whichever is lower), 5-year carryforward of unused amount; reduced by state credits

New Education Scholarship Credit

Looking further ahead, beginning in 2027, the OBBBA adds a nonrefundable tax credit of up to $1,700 (or 100% of the gift, whichever is less) for donations to qualifying nonprofits that provide scholarships for K-12 students.

• It must be taken instead of a charitable deduction.
• Individuals may claim a $1,700 nonrefundable tax credit, with excess amounts eligible for a five-year carry forward.
• Credits are reduced by any state-level credits claimed on the same contribution.

What this means:

• This new provision could make direct giving to scholarship granting organizations especially attractive for donors interested in education.
• The use of a credit (rather than a deduction) may provide stronger after-tax benefits for certain taxpayers.

The Bottom Line

The OBBBA reshapes how charitable giving fits into broader tax planning. For individuals, the universal charitable deduction opens the door for more taxpayers to receive a tax benefit from smaller gifts, while higher-income households and corporations will need to reassess the timing and structure of their giving to maintain tax efficiency.

As with many aspects of tax law, the right approach will vary by individual situation. If charitable giving is an important part of your legacy and financial plan, now is the time to revisit your strategy for 2026 and beyond.

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