If you already make donations to charity or are looking to implement a new tax strategy that includes charitable giving, the OBBB Act has introduced new provisions that you should be aware of. 

Whether you itemize donations or not, here’s what you need to know before your next charitable donation.

A Big Win for Non-Itemizers

If you don’t itemize deductions on your tax return, charitable giving previously provided little to no tax benefit (outside of temporary pandemic relief provisions).

The OBBB Act changed that by introducing a new permanent deduction for non-itemizers under IRC §170(p).

Deduction Limits:

• Single filers: Up to $1,000
• Married Filing Jointly: Up to $2,000

What qualifies:

• Applies only to cash contributions
• Must be made to qualifying public 501(c)(3) charities
• Does not apply to:
  • Donor-advised funds (DAFs)
  • Private non-operating foundations
  • Supporting organizations

If you take the standard deduction, you can now still receive a charitable deduction.

This deduction is above-the-line, meaning it reduces your Adjusted Gross Income (AGI). This can affect:

• Phaseouts
• Medicare IRMAA thresholds
• Net Investment Income Tax exposure
• Other AGI-based calculations

This is a tax deduction, not a tax credit. It reduces taxable income, not your tax bill dollar-for-dollar.

The New “0.5% Floor” for Itemizers

If you itemize deductions on Schedule A, the OBBB Act introduced a new 0.5% of AGI floor on charitable contributions.

In other words, you may deduct charitable contributions only to the extent they exceed 0.5% of your AGI.

For Example:

If your AGI is $200,000, your floor would be $1,000 (0.5% of your AGI):

• Case 1 (Below the Floor): You donate $800. You will have no deduction because you haven’t surpassed your $1,000 entry threshold.
• Case 2 (Above the Floor): You donate $5,000. You get a $4,000 deduction because $1,000 was absorbed by the floor.

This “floor” applies to you annually.

How Carryovers Work Under the OBBB Act

Charitable contributions that exceed percentage limits (such as the 60% of AGI limit for cash gifts to public charities) may still be carried forward up to five years.

However, beginning in 2026:

• The 0.5% floor applies in the year the deduction is claimed, even for carryovers.
• The floor is applied to total charitable contributions for that year before percentage limitations are applied.
• Carryovers do not automatically bypass the floor.

If your total charitable contributions for the year do not exceed the 0.5% threshold, the excess is not deductible that year. However, subject to the normal 5-year carry-forward rules, unused amounts may continue forward (depending on ordering and limitation rules).

Ordering Rules Matter

When multiple types of contributions exist (cash, appreciated stock, private foundation gifts, etc.), the IRS applies statutory ordering rules under §170(b).

In simplified terms, contributions are layered roughly in this order:

• Cash contributions to public charities (60% limit)
• Other property to public charities (generally 50% limit)
• Capital gain property to public charities (30% limit)
• Cash contributions to private foundations (30% limit)
• Capital gain property to private foundations (20% limit)

The 0.5% floor interacts with these ordering rules, which can affect which contributions are absorbed first and which amounts carry forward.

This is where planning with an expert CPA becomes important.

Planning Considerations

These changes make charitable giving more technical than prior years. The benefit you receive now depends not just on how much you give, but on your AGI, whether you itemize, the type of property donated and how prior-year carryovers interact with the new 0.5% floor. Proactive planning can help ensure your gifts are structured in the most tax-efficient way possible.

If You Itemize:

• You must clear the 0.5% AGI floor before receiving any charitable deduction benefit.
• Large gifts may still create carryovers.
• Contribution type and timing matter more than before.

If You Take the Standard Deduction:

• You can now deduct up to $1,000 ($2,000 MFJ) in qualifying cash gifts.
• The deduction reduces AGI.

What It Matters

The OBBB Act changed how charitable deductions work for both itemizers and non-itemizers.

The new 0.5% floor adds complexity for higher-income taxpayers.
The permanent non-itemizer deduction creates new opportunities for standard deduction filers.
Strategic timing, gift type and AGI management now matter more than ever.

Contact us today so we can maximize your charitable giving tax strategy.

Resources

Bipartisan Policy Center:

• The One Big Beautiful Bill Act’s Changes to Charitable Deductions
• How the New Charitable Deduction Floors Work

National Philanthropic Trust: Navigating Charitable Giving in the Wake of New Tax Reform

Tax Foundation: Changes to Charitable Giving Under the One Big Beautiful Bill Act