Can you deduct your donation?

The One Big Beautiful Bill Act (OBBBA) has been signed into law, and while most of the bill extends rules already put in place by the 2017 Tax Cuts and Jobs Act (TCJA), there have been some important new changes to charitable giving.

Starting in 2026, if you take the standard deduction, you can now deduct up to $1,000 ($2,000 for married filing jointly) of charitable giving. This is great news for most of us because only ~10% of households take itemized deductions.

This deduction only applies to cash donations (sorry Goodwill), meaning that in 2026, you'll want to start collecting receipts for cash donations again. The IRS guidelines state that a bank record or a written communication from the qualified organization containing the name of the organization, the amount, and the date of the contribution will suffice.

If you generally take the standard deduction, it may make sense to delay donations until 2026 to take full advantage of this additional deduction. However, the opposite may be true if you generally take itemized deductions; also starting in 2026, a 0.5% AGI floor will take effect for charitable donations included in itemized deductions. This means donations are only deductible after they exceed 0.5% of your adjusted gross income (AGI). For example, a couple with an AGI of $300,000 will only be able to deduct charitable donations in excess of $1,500.

If you have a donor advised fund (DAF), keep in mind that contributions to these accounts are only includable under the itemized deduction method. While a donor advised fund may now be less desirable to those who take the standard deduction, it could be an even more valuable tool to those who itemize.

For many people, the OBBBA means your first $1,000 in donations are now deductible. If you would like to learn more about charitable donations or donor advised funds you can schedule an intro call here: https://tidycal.com/bestcase/intro-phone-call