Key topics covered in this article:

  • Universal Charitable Deduction: Starting in 2026, standard deduction filers can claim a new above-the-line charitable deduction of up to $1,000 for singles and $2,000 for joint filers, encouraging broader participation in charitable giving.
  • Itemizer and Corporate Donor Changes: New thresholds for itemizers and corporations will influence donation timing and strategies, with nonprofits needing to guide donors on maximizing tax benefits.
  • Strategic Nonprofit Messaging: Tailored communication and updated materials are essential to help donors understand the new rules and maintain strong relationships.

New tax rules take effect in 2026 and will change how many people think about their charitable giving. The law adds a universal deduction for standard deduction filers and sets new thresholds for itemizers and corporate donors. As a result, some supporters may look at the timing of their gifts and decide whether to contribute this year or next. Nonprofits that understand the changes will be better situated to answer donor questions and plan for the months ahead.

Changes Affecting Non-Itemizers (Standard Deduction Filers)

Beginning in 2026, taxpayers who take the standard deduction will be able to claim a new above-the-line charitable deduction of up to $1,000 for single filers and $2,000 for joint filers.

Many donors fall into this group, with about 86% of taxpayers expected to take the standard deduction in 2026. This means the universal charitable deduction will apply to a very large portion of the donor base, and it will be especially important to communicate this new tax advantage to potential donors.

There is evidence that a universal charitable deduction may motivate charitable giving. During the pandemic, the CARES Act created a temporary charitable deduction of $300 for single filers and $600 for joint filers. Nearly 30% of non-itemizers used that deduction in 2021. That means that even a modest deduction encouraged millions of households to better track and report their charitable giving. A higher deduction under OBBBA may result in even more participation from standard deduction filers.

Nonprofits have an opportunity here. They will want to focus on explaining the new deduction, and they will also want to make the donation process as simple and easy as possible. Monthly giving programs or tiered membership campaigns can entice small and mid-level donors to give for the first time. Even a simple message such as “Your cash gifts may qualify for a new tax benefit beginning in 2026” can help donors feel informed and encouraged to participate.

Changes Affecting Itemizers

Beginning in 2026, itemizers will need to give more than 0.5% of their adjusted gross income (AGI) before they can claim any charitable deduction. For example, a household with $300,000 of income will need to give more than $1,500 before any part of that donation becomes deductible. Once a household meets that threshold, charitable deductions work the same as they have in the past.

Additionally, high-income donors will also see a small change in how their deductions are calculated. If they are in the 37% tax bracket, the tax benefit from itemized deductions will be calculated as if they were in the 35% bracket. This lowers the tax savings on charitable gifts for these households; however, it does not limit how much they can give to nonprofits.

Major donors may decide to make larger contributions before the new rules take effect. Others may combine several years of giving into one year (also known as “bunching”) or use donor advised funds (DAFs) to support their favorite charities.

Nonprofits are encouraged to get ahead of the changes and begin communicating with high-income donors as soon as possible. Clear messaging about the changes builds trust and helps donors maximize their potential tax benefits.

Corporate Giving Changes

Also starting in 2026, corporations must give more than 1% of taxable income before any portion of their charitable contributions is deductible. Only the amount above the 1% floor qualifies. For example, a company that gives an amount equal to 2% of taxable income can deduct only the second 1%. The long-standing 10% limit on corporate charitable deductions will continue into the new year.

The new rule may cause businesses to rethink how they give. Some small businesses may not give enough in a typical year to get past the 1% mark, so they may wonder if their donations still “count” for tax purposes. These businesses might decide to keep giving anyway because they care about the cause, while others may pull back if they think the tax break is out of reach.

Larger companies often give more each year, so they are more likely to clear the 1% floor. These companies may even increase their giving or set up multi-year commitments to make sure they stay above the threshold.

Messaging is important there. In addition to explaining the new tax rules, nonprofits will need to make it easy for businesses to understand the impact of their donations. Updating program descriptions and offering tiered sponsorship options can help the business community stay involved even with changes to the tax benefit.

Strategic Implications

Nonprofits can use the rest of 2025 to get organized and help donors understand what the new rules will mean in 2026. A few areas deserve attention as organizations prepare for the transition.

  • Are marketing materials up to date? Donors will look for information on the new tax provisions in FAQs and other donation-related webpages. Small updates can help donors see the new thresholds and opportunities available.
  • Does our team know the basics? Donors may ask when the rules take effect or how the universal deduction works. Giving staff, board members, and volunteers a one-page update helps keep donors informed and answers consistent across the organization.
  • Are messages tailored for different donors? Different groups will care about different provisions. Standard deduction filers will need to know about the universal deduction. Itemizers will want to understand the 0.5% floor with examples. Corporate donors, especially small business owners, may need help understanding the new 1% threshold.

Conclusion

The charitable giving updates in OBBBA will influence how many donors plan and structure their contributions. While the changes may create some early uncertainty, they also offer new opportunities for nonprofits to strengthen relationships and provide helpful guidance. For more information on how the OBBBA affects your nonprofit, contact PBMares Not-for-Profit Partner Bo Garner.