Discover how the “One Big Beautiful Bill” impacts charitable tax deductions for 2026 and beyond. It revived the charitable deduction for non-itemizers (which was available in 2020 and 2021), made the 60%-of-AGI limit permanent, established a deduction “floor,” and more. Understanding these changes can help you save more when you give more.

NEW TAX LAW CHANGES

The One Big Beautiful Bill that passed includes permanently extending tax cuts from the Tax Cuts and Jobs Act, including increasing the cap on the amount of state and local or sales tax and property tax (SALT) that you can deduct, makes cuts to energy credits passed under the Inflation Reduction Act, makes changes to taxes on tips and overtime for certain workers, reforms Medicaid, increases the Debt ceiling, and reforms Pell Grants and student loans. Updates to this article are in process. Check our One Big Beautiful Bill article for more information.

How did the “One Big Beautiful Bill” change charitable deductions for 2026?

Starting with the 2026 tax year, the “One Big Beautiful Bill” (OBBB) changed how charitable donations are deducted on your federal income tax return by:

• reviving the Charitable Deduction for Non-Itemizers
• made the 60%-of-AGI cap on cash donations permanent
• establishing a 0.5% “floor” for the itemized deduction for charitable contributions
• increased the itemized charitable deduction for certain whaling captains

The OBBB also created a new federal tax credit for contributions to a “scholarship granting organization.” However, the credit isn’t available until the 2027 tax year.

Also known as the Working Families Tax Cut, the OBBB was signed into law on July 4, 2025.

How does the Charitable Deduction for Non-Itemizers work?

Beginning with the 2026 tax year, if you don’t claim itemized deductions on your tax return – that is, you opt to take the Standard Deduction instead – you can deduct up to $1,000 of cash contributions to charitable, religious, educational, scientific, literary, and certain other eligible organizations (up to $2,000 for married couples filing a joint return).

“A charitable deduction for non-itemizers was temporarily available for the 2020 and 2021 tax years, but the current deduction generally provides a larger benefit than the prior temporary deduction,” says Jeff Godwin, a CPA and tax assistant Expert based in Carlsbad, California. When the OBBB revived the former deduction, it raised the maximum deduction to $1,000 ($2,000 for joint filers).

Maximum Charitable Deduction for Non-Itemizers
Tax Year(s)	Married Couples Filing Jointly	Married Couples Filing Separately	All Other Taxpayers
2020	$300	$150	$300
2021	$600	$300	$300
2026 and beyond	$2,000	$1,000	$1,000

For more information, see our article on the current Charitable Deduction for Non-Itemizers.

What’s the 60%-of-AGI limitation on charitable contributions?

Since the 2018 tax year, the itemized deduction for cash donations to charitable, religious, educational, and certain other organizations has been limited to 60% of your adjusted gross income (AGI). Any amount over the 60%-of-AGI limit can be carried forward and deducted in each of the next five years until it’s used up (although it can’t be used toward the charitable deduction for non-itemizers).

Example: You have an AGI of $200,000 and made a $150,000 cash donation to charity. If you claim itemized deductions on your federal income tax return, the 60%-of-AGI limitation reduces your charitable deduction to $120,000 ($200,000 x 60% = $120,000). The remaining $30,000 ($150,000 – $120,000 = $30,000) can be carried forward for up to five years.

Before 2018, cash contributions were subject to the same limitation as non-cash contributions – 50% of your AGI. But the Tax Cuts and Jobs Act (TCJA) of 2017 temporarily increased the limitation to 60%-of-AGI for cash donations.

“The 60%-of-AGI limit for cash contributions was supposed to expire after the 2025 tax year, but the ‘One Big Beautiful Bill’ made it permanent,” notes Godwin. So, the limit remains in place after the 2025 tax year and there’s no set expiration date.

How does the 0.5% floor on the itemized deduction for charitable contributions work?

Under the new “floor” on the itemized deduction for charitable contributions – which is effective for the 2026 tax year and beyond – you can only deduct eligible donations that exceed 0.5% of your AGI.

“If your donations for the year are below the 0.5%-of-AGI threshold, then the itemized deduction isn’t allowed,” says Godwin. “This impacts people who itemize and make smaller charitable gifts during the year.”

Example 1 (deduction limited): For the 2026 tax year, you have an AGI of $200,000 and donated $4,000 to charity. If you claim itemized deductions on your federal income tax return, you can only deduct $3,000 of your charitable donations. That’s because the first $1,000 of donations is not deductible ($200,000 x 0.5% = $1,000). That leaves you with $3,000 in deductible donations ($4,000 – $1,000 = $3,000).

Example 2 (deduction eliminated): For the 2026 tax year, you have an AGI of $200,000 and donated $750 to charity. If you claim itemized deductions on your federal income tax return, you can’t deduct any of your charitable donations. That’s because your donations are less than the 0.5% floor, which is $1,000 ($200,000 x 0.5% = $1,000).

You can carry over donations that aren’t deductible because of the 0.5% floor to future tax years, but only if you’re already carrying over unused donations because of one of the existing AGI-based limitations (such as the 60%-of-AGI limit for cash contributions mentioned earlier). If that’s the case, you can add any donations that aren’t allowed because of the floor to the overall carryover amount.

Example 3 (carryover increased): For the 2026 tax year, you have an AGI of $200,000 and made a $150,000 cash donation to charity. If you claim itemized deductions on your federal income tax return, the 60%-of-AGI limitation reduces your charitable deduction to $120,000 ($200,000 x 60% = $120,000). The remaining $30,000 ($150,000 – $120,000 = $30,000) can be carried forward for up to five years.

In addition, because of the 0.5% floor, the first $1,000 of donations is not deductible ($200,000 x 0.5% = $1,000). That further reduces your total charitable deduction to $119,000 ($120,000 – $1,000 = $119,000). However, since you’re already carrying over donations that weren’t deductible because of an AGI-limit, you can add this $1,000 to the $30,000 that’s already being carried forward for a total carryforward of $31,000.

How much was the charitable deduction for whaling captains increased?

Starting with the 2026 tax year, the OBBB increased the maximum itemized charitable deduction for certain whaling captains from $10,000 to $50,000.

This deduction is only available for “reasonable and necessary” whaling expenses paid during the year to carry out sanctioned whaling activities by a whaling captain recognized by the Alaska Eskimo Whaling Commission. Only subsistence bowhead whale hunting activities conducted under the commission’s management plan count as sanctioned activities.

The deduction is only allowed for the costs of:

• acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities
• supplying food for the crew and other provisions for carrying out sanctioned activities
• storing and distributing the catch from sanctioned activities

Who will be able to claim the tax credit for contributions to a scholarship granting organization?

Although it’s not available until the 2027 tax year, the OBBB also created a new non-refundable tax credit for U.S. citizens and residents who make cash contributions to a tax-exempt “scholarship granting organization” (SGO). The credit is capped at $1,700 per year, but any donations exceeding the limit can be carried forward for up to five years. 

The credit only applies if the SGO’s state chooses to participate in the credit program and provides a list of eligible SGOs in the state to the IRS. A list of participating states is on the IRS website.

The SGO also has to use donations to fund scholarships for “eligible students” in the state. Students eligible to enroll in a public elementary or secondary school, and who are from a family with an income that’s 300% or less of the median gross income for their area, are eligible students for purposes of the credit.

In addition, for the credit to apply, the SGO must:

• provide scholarships to 10 or more students who attend more than one school
• spend at least 90% of its income on scholarships for eligible students
• only provide scholarships for elementary or secondary education expenses, including tuition, fees, tutoring, and classroom supplies
• first prioritize scholarships for students who were awarded a scholarship for the previous school year, and then for students who have a sibling who was awarded a scholarship by the SGO
• not earmark or set aside donations for scholarships to any particular student
• verify the annual household income and family size of students who apply for scholarships to make sure they’re eligible students
• limit scholarships to students from families with an income that doesn’t exceed 300% of the median gross income for their area
• prevent the co-mingling of credit-eligible donations

Note that “double dipping” is not allowed. For instance, you can’t use a donation to an SGO to claim both the credit and a charitable deduction (either as an itemizer or non-itemizer). The federal credit is also reduced by any state tax credits received for the same donation. 

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