The following changes were outlined in H.R. 1 and will go into effect January 1, 2026: 

FOR INDIVIDUAL DONORS:

Non-Itemizers (If you take the standard deduction): Similar to the “above the line” charitable deductions made available during the pandemic, you will now be able to receive a charitable deduction for donations up to $2,000 for joint filers and $1,000 for single filers, in addition to your standard deduction. It’s important to note, donations to donor-advised funds (DAFs) are not eligible for this deduction.

Itemizers (If you itemize deductions): A new 0.5% floor will be implemented for charitable deductions, meaning you can only claim a deduction for contributions that exceed 0.5% of your adjusted gross income (AGI). Additionally, for the top tax bracket, the rate cap for all itemized deductions will now be 35% of your taxable income (rather than the current 37% tax rate). For 2025, if your philanthropic gifts exceed these limitations, this year will be your last chance to receive a tax break on the full value of your gifts. Note: the new 0.5% floor does NOT apply to gifts made through qualified charitable distributions (QCDs).

Corporate Donors: Corporate donors giving to nonprofits should maximize their gifts before a new 1% floor is instituted in 2026. As a reminder, corporations can deduct charitable contributions up to 10% of net income. This means corporations can only deduct charitable gifts that exceed 1%, but that do not exceed 10% of taxable income.

With this information in mind, below are some suggestions experts recommend for maximizing your gifts to the missions and causes you care about. We encourage you to discuss your year-end planning with your financial and tax professional to maximize your benefits.

Tax-Conscious Ways to Give in 2025 & 2026:

Qualified Charitable Distributions (QCDs): A QCD is a gift from a donor’s IRA. Donors 70½ or older can donate up to $108,000 per person in 2025, and upwards of $111,000 in 2026 without it counting as taxable income (meaning the new 0.5% floor and cap on value do not apply), making them an excellent method of giving in both 2025 and 2026.

Charitable Deduction Carry Forwards: While the IRS limits the amount of charitable contributions you can deduct in a single year based on a percentage of your Adjusted Gross Income (AGI) (60% for most cash gifts, 30% for appreciated non-cash assets like stock), you apply unused charitable contributions that exceed their annual deduction limits to future tax years, for up to five consecutive years. The new 0.5% floor does not apply to carry forward gifts. Some donors may consider buddling multiple gifts in 2025 and using a carry forward into 2026 and beyond for maximum benefits.

Donor-Advised Funds (DAFs): Beginning a DAF in 2025 could be a beneficial way to utilize the charitable deduction carry forward mentioned above, while still giving annually to your selected nonprofits.

Corporate Donations: If your company matches charitable gifts, now is the perfect time to inquire about matching your year-end contributions. The 1% floor for corporations will take effect in January 2026.

Mama’s Kitchen’s fiscal year began on July 1st, 2025 and ends on June 30, 2026. Like so many nonprofits, most of our donations are received at year-end, however with these changes we’d like to extend our year-end campaign through January 15th, so that you might receive the benefits of the new charitable deduction laws, while still enabling you to contribute to our important “end of year” support.

We wish you a peaceful holiday season and prosperous New Year.

Sources: UBS, Tax Foundation, National Philanthropic Trust