Charitable giving changed for 2026. Most donors still get a federal deduction, but the rules now depend on whether you itemize, whether you give through a corporation, and whether you are old enough to give directly from an IRA. With December 31 approaching, here is how the new rules work and how to plan your gifts.
Itemizers: The 0.5% Floor
For taxable years beginning after December 31, 2025, Section 170(b)(1)(I) allows charitable contributions only to the extent they exceed 0.5% of your contribution base, which is generally your adjusted gross income.
Example: a married couple with $400,000 of AGI who itemize and give $10,000 in cash. The floor is 0.5% of $400,000, or $2,000, so the deduction is $8,000. If they give $1,500, they get no itemized charitable deduction at all.
The floor is a reason to consider bunching: combining two or more years of giving into one year, often through a donor advised fund, so more of the gift clears the floor and you itemize in that year.
Non-Itemizers: A New Deduction
Under Section 170(p), as amended for taxable years beginning after December 31, 2025, people who take the standard deduction can deduct up to $1,000 ($2,000 on a joint return) of cash contributions. The IRS describes the same limits in Publication 505. Two restrictions apply: the gift must go to a public charity, and it does not count if it goes to a supporting organization or to establish or maintain a donor advised fund.
Corporations: The 1% Floor
For C corporations, Section 170(b)(2)(A) now allows charitable contributions only to the extent they exceed 1% of taxable income, and still not above 10% of taxable income. A corporation with $500,000 of taxable income that gives $4,000 gets no deduction, because the first $5,000 is disallowed. For closely held businesses, compare giving through the corporation with the owner giving directly, where the 0.5% floor applies instead.
Qualified Charitable Distributions
A qualified charitable distribution (QCD) is a distribution from an IRA, other than an ongoing SEP or SIMPLE IRA, owned by someone age 70½ or older, paid directly from the IRA to a qualified charity, according to the IRS IRA distribution FAQs. The IRS also confirms that a QCD can satisfy your required minimum distribution.
For 2026, IRS Notice 2025-67 increases the annual QCD limit from $108,000 to $111,000, and the one-time election for a QCD to a split-interest entity from $54,000 to $55,000.
Because a QCD is excluded from income rather than deducted, it is not reduced by the 0.5% floor, and it works whether or not you itemize. Lower AGI can also help with other AGI-based limits. For many donors over 70½, a QCD is now the most efficient way to give.
How to Give Before December 31, 2026
- Make the gift complete in 2026. A contribution generally counts in the year it is paid. Mailed checks and online card gifts dated by December 31 generally count, but pledges do not.
- Start QCDs early. The IRA custodian must send the payment directly to the charity, and custodians often need lead time in December.
- Give appreciated stock. Donating long-term appreciated securities to a public charity can avoid capital gain tax on the appreciation; allow time for the transfer.
- Keep acknowledgments. Get a written acknowledgment from the charity for gifts of $250 or more.
- Run the numbers both ways. Compare itemizing with the standard deduction plus the new $1,000 or $2,000 deduction.
California Is Different
California has not adopted the One Big Beautiful Bill Act. The FTB has stated that its current conformity update, to January 1, 2025, does not include that law. The 0.5% floor, the 1% corporate floor, and the new non-itemizer deduction are federal changes that do not automatically carry to your California return, so your California charitable deduction should be figured separately.
See our 2026 year-end tax planning checklist for the rest of your year-end moves.
Key Takeaways
- Starting in 2026, itemizers deduct charitable gifts only above 0.5% of AGI.
- Non-itemizers can deduct up to $1,000 ($2,000 joint) of cash gifts to public charities, excluding donor advised funds and supporting organizations.
- Corporate gifts count only above 1% of taxable income, up to the 10% cap.
- The 2026 QCD limit is $111,000, and QCDs avoid the floor entirely.
- California has not adopted these federal changes.
If you want help choosing between bunching, a donor advised fund, a QCD, or corporate giving before December 31, schedule a consultation with SMB CPA Group, or contact us with your questions.
Disclaimer: The information presented on this website or any SMB CPA Group, PC online platform is for general information and illustrative purposes only. It should not be considered tax, legal, financial, or other professional advice, and it is not a substitute for advice from a licensed professional who knows your circumstances.
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SMB CPA Group