Tax Break for Donating to Charity Is Coming Back in 2026

President Donald Trump’s One Big Beautiful Bill Act is bringing about a significant change in tax policy that will impact the way Americans can benefit from charitable donations. Under this new act, which will take effect in the 2026 tax year, taxpayers who take the standard deduction will now be able to claim a charitable-giving deduction. This is a major shift that will make about 90% of all taxpayers eligible for this tax break.

Before this new rule, non-itemizers were unable to benefit financially from their charitable donations. However, with this change, individuals filing as single can deduct $1,000, while married couples filing jointly can deduct $2,000 for their charitable contributions. This is a welcome change for those who choose not to itemize their deductions and opt for the standard deduction instead.

The Tax Cuts and Job Act signed by President Trump in 2017 had initially led to a decline in charitable giving, as the increased standard deduction made it less advantageous for taxpayers to itemize their deductions. This resulted in a $20 billion drop in charitable donations in 2018 according to a study by Indiana University.

While the new charitable-giving deduction is a positive development for many taxpayers, there are concerns about its impact on charities. Some experts believe that the changes may actually discourage big-ticket donors from contributing, as the enhanced standard deduction remains permanent. This could potentially lead to a decrease in overall charitable donations.

The winners under this new tax rule are taxpayers who typically take the standard deduction and make small annual donations of around $1,000. These donors can now benefit from a tax break in proportion to their tax bracket. However, for high-income earners who itemize their deductions, the new rules may actually disincentivize charitable giving, as the tax benefits for top earners will soon max out at 35%.

Overall, the impact of the new charitable-giving deduction remains uncertain. While it may benefit some taxpayers, particularly those who make smaller donations, there are concerns about its long-term effects on charitable donations. It is recommended that individuals consult a financial planner to determine the best course of action given the changes in tax policy.