Are you aware of the upcoming rule changes governing how much of your contributions will be deductible? Whether you contribute cash, donate items, or your time, it’s important you stay on top of how this will impact you?
Due to the recent federal tax-and-spending cuts package it affects filers who take the standard deduction. Others affect filers who itemize, which you do when your deductions combined exceed the standard.
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2026 Changes
The allowable deduction amounts depend on whether you itemize or not. Go Banking Rate and CNN Business provided information about these changes this week. Let’s dive in to see the impact to help you plan moving forward.
If You Don’t Itemize
In the first two years of the pandemic, if you took the standard deduction on your federal income tax return, you were also allowed to deduct an additional $300 ($600 for married couples filing jointly) for charitable cash gifts you made. That special provision then expired.
The changes specify that starting in 2026, you will be allowed to deduct up to $1,000 in cash donations ($2,000 for joint filers) for cash donations made to qualifying 501 (c)(3) charities only.
If You Do Itemize
For the first time, starting in 2026, those who itemize their deductions will be allowed to deduct their cash contributions only if these contributions exceed 0.5% of their adjusted gross income.
An existing rule that further limits itemizers will remain in effect that applies to public charities in a given year. You can’t deduct the portion of your cash donations that exceeds 60% of your AGI in the year you make them. Yet, thanks to another existing rule, you may be able to deduct any cash gifts made the following year!
That other existing rule allows someone to carry forward their “excess” contributions for five years and deduct them on future returns. The “excess” is any portion of your cash donations that exceeds the AGI ceiling and, starting next year, falls below the new floor of 0.5% of AGI.
Cap on High Income Filers
Today, if you are in the 37% tax bracket, your deductions will treat you as if you are in the 35% tax bracket. Your tax deduction will be reduced to the 35% level.
Non-Cash Gifts
IF you itemize, any non-cash contributions you make – such as clothes, food, or household goods – are also subject to the 0.5%-of-AGI new floor.
Impact on Deductions
These changes may impact if you itemize or not. I’m not a tax professional! I know I will talk to mine to see what’s best for my situation! Each of us is unique. It’s a good idea to plan for yourself with a tax professional.
Image by Gerd Altmann from Pixabay
Speaking About Planning
It’s that word again, planning! And yes, it is a good time to discuss planning about charitable contributions and the rest of your life!
It would be so nice if everything in life was “once and done”, wouldn’t it? Ah, if only it were so!
We change, situations change, laws change, and it falls on us to keep up as best we can. It’s possible to chunk down what you need to plan into sub-sections. Please feel free to reach out directly with specific topics of interest to you. Researching and digging deep is fun for me!
Send me an Email or Book a Time with Lynn if you’d like to Zoom connect. For additional information about my work, check out @ The Living Planner or @ The Living Planner.
If you’re up for planning your life’s administrative side, my book is a resource. The Living Planner What to Prepare Now While You Are Living © Check it out HERE.
Quote for the week: “Aging gracefully means being flexible, being open, allowing change, enjoying change, and loving yourself.” Wendy Whelan
Let’s get you started! Lynn