The charitable donation tax deduction is changing. The 2025 Tax Act, signed into law in July 2025 and commonly called the One Big Beautiful Bill Act, made several updates that affect how much of your giving you can actually write off on your federal return. Most of the new rules take effect in the 2026 tax year, which makes the 2025 filing year an important planning window. Whether you give cash, stock, or property, these provisions determine how much of that generosity translates into real tax savings.
For most taxpayers, the changes are manageable. But for those who make large annual contributions, or who donate appreciated property like stock, artwork, or collectibles, the details matter. Understanding the new deduction floor, the AGI percentage limits, and the documentation requirements can make the difference between maximizing your tax benefit and leaving money on the table. The tax advisory services team at Pease Bell CPAs works through these calculations with clients every filing season.
The new 0.5% charitable deduction floor explained
The most notable change in the 2025 Tax Act is the addition of a 0.5% floor on charitable contributions for taxpayers who itemize. Beginning in the 2026 tax year, itemizers must subtract 0.5% of their adjusted gross income (AGI) from their total charitable deductions before claiming any benefit. The floor does not apply for 2025, which is one reason many advisors are discussing whether to accelerate giving into the current year.
In practical terms, once the floor takes effect a taxpayer with an AGI of $100,000 cannot deduct the first $500 of contributions. A taxpayer with $200,000 of AGI loses the first $1,000. The floor applies to itemized charitable donations generally, including the value of miles driven for charitable purposes. The charitable standard mileage rate remains at 14 cents per mile for 2025, a rate set by statute that has not changed in years.
For most people giving modest amounts to their church, alma mater, or local nonprofit, this floor has a relatively small impact. But for higher-income taxpayers who make significant contributions, the floor reduces the effective value of every dollar given. Planning around this threshold becomes a practical consideration when deciding the timing and size of donations.
Permanent 60% AGI limit for cash donations to qualified organizations
While the deduction floor tightens things on one end, the 2025 Tax Act preserved a favorable limit on the other. The AGI percentage limitation for cash contributions to certain qualifying public charities is permanently set at 60%. That 60% limit first arrived under the 2017 Tax Cuts and Jobs Act and had been scheduled to revert to 50% after 2025. The 2025 Tax Act made the 60% limit permanent rather than letting it expire.
These qualifying organizations, historically referred to as “50% charities,” include churches, educational institutions, hospitals, and medical research organizations. If you are unsure which category a charity falls under, the IRS provides a free lookup tool called the Tax Exempt Organization Search. Checking this tool before making a large gift can help you confirm the deduction limit that applies. For background on the underlying limits, the IRS also maintains a detailed overview in Publication 526, Charitable Contributions.
The permanent 60% limit means that taxpayers who give generously in cash to qualified public charities can still deduct a large share of their AGI. For someone with $150,000 of AGI, the maximum deductible cash contribution to a qualifying charity is up to $90,000, before applying the new 0.5% floor in 2026. This limit is especially relevant for donors who concentrate their giving into a single tax year through strategies like bunching contributions or using a donor-advised fund.
The 2025 Tax Act also restored a deduction for taxpayers who do not itemize. Beginning in 2026, standard-deduction filers can claim an above-the-line deduction for cash gifts to qualifying public charities, up to $1,000 for single filers and $2,000 for married couples filing jointly. This benefit applies only to cash and excludes gifts to donor-advised funds and private foundations.
How to deduct charitable contributions of property
The tax deduction for charitable donations of property, as opposed to cash, follows stricter rules. Property that would produce a capital gain if sold, such as stocks, artwork, memorabilia, coins, and other collectible items, is subject to tighter AGI limits and additional documentation requirements. These property limits were not changed by the 2025 Tax Act and continue to apply.
Depending on the type of property and the receiving organization, the deduction may be limited to as little as 20% of AGI. That is a significant reduction compared to the 60% limit available for cash contributions to public charities. Taxpayers who donate appreciated property must also consider whether special forms need to be completed and whether specific appraisals or documentation must be attached to the return.
Documentation thresholds escalate with the size of the gift. Noncash contributions over $500 require Form 8283, and donations of most property valued over $5,000 require a written qualified appraisal completed by a qualified appraiser. Failing to obtain that appraisal can disallow the deduction, even when the underlying gift was legitimate and the value is reasonable. Building these steps into your year-end giving plan prevents avoidable surprises during an audit.
The key takeaway is that not all charities are treated the same under the tax code. A contribution of stock to a private foundation, for example, carries a different limitation than the same stock donated to a public charity. Before making large property donations, verify the organization’s classification using the IRS Tax Exempt Organization Search tool and consult with a tax professional who can map out the correct limitation and documentation requirements. Nonprofits on the receiving end face their own reporting obligations, and our nonprofit accounting services help organizations substantiate gifts correctly.
Charitable contribution carryforward rules still apply
One provision that remains unchanged and can help offset the impact of the deduction limits is the charitable contribution carryforward. If your total deductible contributions exceed the applicable AGI percentage limit in a given year, the excess can generally be carried forward and deducted over the next five years.
This carryforward rule is especially relevant for taxpayers who make large one-time gifts, such as donating a significant block of appreciated stock or funding a major capital campaign at a church or university. Rather than losing the deduction entirely, the unused portion rolls forward and can reduce taxable income in future years, subject to the same AGI limits in each of those years.
Keeping detailed records of carryforward amounts is critical. The IRS expects you to track the original contribution year, the type of property donated, and the organization’s classification. Failing to maintain this documentation can result in the loss of a carryforward deduction that you are otherwise entitled to claim.
Practical steps to maximize your charitable donation tax deduction
Given the interplay of new rules, the 0.5% floor arriving in 2026, the permanent 60% cash limit, and the long-standing property provisions, proactive planning is more valuable than ever. Here are several concrete steps to consider.
Consider the 2025 planning window
Because the 0.5% floor does not apply until 2026, some itemizers may benefit from accelerating planned 2026 gifts into 2025. The right answer depends on your income, your other deductions, and your overall giving pattern, so model both years before acting.
Bunch contributions into a single tax year
If you typically give $5,000 to $10,000 annually, consider combining two years of contributions into one year to exceed the standard deduction threshold. In the off year, take the standard deduction instead. This alternating strategy can increase your total deductions over a two-year cycle.
Use the IRS Tax Exempt Organization Search tool
Before making any contribution you plan to deduct, verify the organization’s status and classification. The tool is free, publicly accessible, and will tell you whether the charity qualifies as a public charity eligible for the 60% cash limit or falls into a more restrictive category.
Consult a tax professional for property donations
The rules around donating appreciated property are detailed enough that professional guidance is worth the cost. Appraisal requirements, special forms, and varying AGI limits mean that a misstep can significantly reduce or eliminate your deduction.
Track everything for carryforward purposes
If your contributions exceed the applicable AGI limit, keep records of the excess amount, the donation date, the type of contribution, and the receiving organization. These records will be essential when claiming the carryforward in future tax years.
Frequently Asked Questions
What is the 0.5% floor on charitable deductions?
Beginning in 2026, the 0.5% floor means itemizers cannot deduct the first 0.5% of their adjusted gross income in charitable contributions. For example, if your AGI is $100,000, the first $500 of charitable giving would not be deductible. The floor does not apply for the 2025 tax year.
What is the AGI limit for deducting cash charitable donations?
Cash contributions to qualifying public charities, including churches, hospitals, and educational institutions, are deductible up to 60% of your AGI. The 2025 Tax Act made this 60% limit permanent. It applies to cash gifts, not to most property donations.
How are property donations like stock or artwork deducted?
Donations of property that would generate a capital gain if sold are subject to lower AGI limits, potentially as low as 20%. Additional documentation, including a qualified appraisal for items over $5,000, may be required. The specific limit depends on both the type of property and the classification of the receiving charity.
Can I carry forward charitable contributions I could not deduct this year?
Yes. If your contributions exceed the applicable AGI percentage limit, you can generally carry the excess forward for up to five years. The carryforward is subject to the same AGI limits in each future year, so large contributions may take several years to fully deduct.
How do I check if a charity qualifies for the higher deduction limit?
Use the IRS Tax Exempt Organization Search tool. This free database lets you look up any tax-exempt organization and see its classification, which determines the AGI percentage limit that applies to your donation.
Should I itemize deductions to claim charitable contributions?
To claim the full charitable donation tax deduction, you generally must itemize on Schedule A. Beginning in 2026, standard-deduction filers can also claim a limited above-the-line deduction for cash gifts, up to $1,000 for single filers and $2,000 for joint filers. If your total itemized deductions, including charitable gifts, mortgage interest, and state and local taxes, do not exceed the standard deduction, the smaller non-itemizer deduction may be the better route.
