Giving Back in 2026: Maximizing Your Impact Amidst Changing Tax Rules
Here are six new tax incentives to discuss with your advisors to ensure they help you make the most of your giving.
By Aurea Gerard, Director of Philanthropic Advising
The new year presents an excellent opportunity to check in on your charitable giving priorities. This is the case every year, but it is especially true in 2026. There are not only crucial priorities to improve in our communities, but also a few new tax laws that may impact your charitable giving strategies.
Here are the changes that you’ll want to be aware of and share with your tax advisors as soon as possible to determine how these changes might impact your giving.
The New Threshold to Itemize Charitable Deductions
Beginning this tax year, charitable contributions will only be deductible to the extent that you exceed 0.5% of your adjusted gross income. In practical terms, this means that a portion of charitable giving will no longer generate a tax benefit.
For example, if you have an adjusted gross income of $200,000, you will see no tax deduction for the first $1,000 of charitable contributions made in a year. Only donations above that amount will be eligible for deduction, subject to existing percentage-of-income limits.
This new rule functions much like a deductible in an insurance policy, raising the effective threshold for receiving a tax benefit and reducing the immediate incentive for smaller annual gifts among itemizers.
Limitation on Itemized Charitable Deductions for High-Income Taxpayers
High-income taxpayers will face an additional limitation through a new cap on the value of itemized charitable deductions.
Even if you are in the highest federal income tax bracket, the tax benefit of a charitable deduction will be limited to 35% of the contribution. As a result, taxpayers in the 37% bracket will no longer be able to offset their income at their full marginal rate when making charitable gifts.
Benefits of Donating Cash
Another important change provides greater certainty for substantial cash contributions.
Cash gifts to nonprofit organizations can be deducted from up to 60% of adjusted gross income that has been made permanent. After satisfying the new 0.5% AGI floor (as described above), donors may continue to deduct cash contributions up to this level, while non-cash gifts or contributions to certain types of organizations remain subject to lower percentage limits. This permanence preserves a relatively generous framework for major philanthropy even as other rules become more restrictive.
New Charitable Giving Incentive
The new rules also introduce an incentive for those of you who do not itemize tax deductions.
Beginning in the 2026 tax year, individuals who claim the standard deduction will be allowed to take a limited charitable gift deduction above the line. This reduces income before adjusted gross income is calculated. Single filers may deduct up to $1,000, while married couples filing jointly may deduct up to $2,000, provided the contributions are made in cash.
This deduction is available in addition to the standard deduction and represents a meaningful expansion of tax benefits for charitable giving among non-itemizers, many of whom have received no tax benefit for donations in recent years.
However, gifts to donor advised funds are not eligible for this deduction, and neither are non-cash gifts. This is unfortunate because both gifts to donor advised funds and gifts of highly appreciated assets are useful tools that incentivize charitable giving.
Benefits of Qualified Charitable Distributions
If you are a retired taxpayer, you will see an important adjustment through an increase in the qualified charitable distribution (QCD) limit.
Beginning in 2026, the annual amount that can be transferred directly from an individual retirement account to a nonprofit will increase, allowing those age 70 ½ and older to direct more funds to causes without including those distributions in taxable income.
Qualified charitable distributions can also count toward required minimum distributions; this higher limit enhances a tax-efficient giving strategy that is unaffected by itemized deduction limits, adjusted gross income floors or caps on deduction value.
Limitations on Corporate Charitable Deductions
Corporate donors are not exempt from the new framework.
Starting in 2026, corporations may deduct charitable contributions only to the extent that those contributions exceed 1% of taxable income. Contributions below that threshold will not generate a current-year deduction. Amounts that exceed applicable limits may be carried forward to future tax years.
This new floor is likely to influence corporate giving strategies, particularly for businesses that make consistent but relatively modest charitable contributions. The existing 10% cap on corporate charitable deductions will remain in place.
We strongly encourage you as donors to forward this information to your tax advisors. Please contact your philanthropic advisor or a member of our Philanthropic Services team so that we can work alongside your attorney, financial advisor and/or CPA to ensure that you’re set up to meet your charitable goals in 2026.
The Saint Paul & Minnesota Foundation does not provide tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors regarding your individual situation before engaging in any transaction.
As Director of Philanthropic Advising, Aurea Gerard is responsible for leading the Foundation's dynamic team of philanthropic advisors. In her role, Aurea partners with donors to help them reach their philanthropic goals and deepen their engagement with the Foundation.
Aurea joined the Saint Paul & Minnesota Foundation in 2012 and brought with her a wealth of experience in the nonprofit sector. Aurea studied at the University of Saint Thomas and holds an associate's degree and a bachelor's degree in business administration and metaphysical science. She also holds a master’s degree in metaphysical science.
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