The One Big Beautiful Bill, P.L. 119-21, has changed the charitable giving landscape. Individuals, trust, and corporations, will feel the impacts differently. Taxpayers have the opportunity to further their charitable goals with minimal tax planning.
In 2026:
- Itemizer(s) & trust(s) will have a floor, based on their adjusted gross income (AGI), and reduced maximum deduction (2/37ths rule).
- Non-itemizers (those taking the standard deduction) can take a $1,000 charitable deduction in addition to the standard deduction (effective 1/1/2026). If married filing jointly the maximum charitable deduction is $2,000.
- Corporations will have a floor, based on 1% of its taxable income.
*This graph is assuming an all-cash donation, and the taxpayer is an itemizer
The Floor:
The Floor is applied to a taxpayer’s total donations each year. The first .5% of a taxpayer’s adjusted gross-income (Itemizer/Trust) or 1% of taxable income (corporation) will not be eligible for a deduction.
In 2025, charitable contributions are not subjected to the floor.
The 2/37ths rule:
The portion of a taxpayer’s charitable contributions that are over the floor will be eligible for a deduction equal to the taxpayer’s tax rate. However, taxpayers in the 37% tax bracket will be limited to claiming a 35% deduction.
In 2025, taxpayers in the highest tax bracket will be able to claim a 37% deduction for charitable contributions.
Ceiling/Contribution Carryforward:
The portion of a taxpayer’s charitable contribution that surpasses the ceiling each year, the amount beyond the contribution limits will carry forward into subsequent tax years (can only be carried forward for 5 years). Contribution limits depend on the type of asset donated and the type of organization receiving the donation.
Planning Opportunities:
| Taxpayer | 2025 Tax Year | 2026 Tax Year |
| IndividualItemizer | Accelerate donations to avoid the floor and 2/37ths rule | Bunch donations in low-income years |
| Individualnon-itemizer (standard Deduction) | Hold off on donations | Make cash donations to public non-profits |
| Trusts | Accelerate donations to avoid the floor and 2/37ths rule | Bunch donations/leverage trust elections |
| Corporations | Accelerate donations to avoid the floor | Bunch donations into low-income years |
Now is the best time to plan for 2025 and 2026 taxes. If you have any questions or want to maximize the tax benefit of your charitable giving reach out to Alex Kuzmik of Pease Bell.