Abstract visualization of tax regulations and data

Charitable deduction updates for 2025 & 2026

New Changes

The U.S. tax code shapes how we give to the charities that inspire us. With the new One Big Beautiful Bill Act of 2025 now in effect, our members and donors may be wondering: “What does this mean for my year-end gift?” For our members who are United States taxpayers, some substantial changes were enacted that impact when and how individuals and married couples filing jointly may take charitable deductions. Below is a summary of the changes and how they may impact your choices this year and next.

1. A new charitable deduction for non-itemizers

This is good news for donors since most taxpayers don't itemize their taxes. Beginning in 2026, individuals who do not itemize deductions may claim a cash gift deduction of up to $1,000 for single filers and $2,000 for married joint filers. This means that even if you take the standard deduction (and thus previously could not deduct charitable gifts at all), you now may qualify for a deduction.

2. For itemizers: A 0.5% AGI floor kicks in

In less good news, for those taxpayers who do itemize, beginning in 2026, the law imposes a floor: only charitable contributions in excess of 0.5% of your adjusted gross income (AGI) are deductible. In simple terms, if your AGI is $100,000, only giving that exceeds $500 will qualify as a deduction under the charitable-contribution deduction rules.

3. Cap on itemized deduction benefit for high bracket filers

Also beginning in 2026, for taxpayers in the highest marginal rate (37%), the tax benefit from charitable contributions is capped: you can only receive about 35¢ of tax savings for each dollar given instead of 37¢. This is especially relevant for high-income taxpayers who itemize significant charitable contributions.

4. The 60% of AGI limit for cash gifts to charities is continued

Another piece of good news: For taxpayers who itemize, the limit on cash gifts to public charities will remain at 60% of AGI—a previously scheduled drop to 50% has been avoided. So if you itemize and give cash to a public charity (like Data Science Alliance), you can still deduct up to 60% of your AGI (subject to other rules).

Suggested tax-wise giving strategies for 2025 and 2026

Here are a few things you may want to consider, always in consultation with your own tax advisor:

If you do not itemize, cash gifts in 2026 and after will now qualify for the $1,000/$2,000 deduction as a non-itemizer—it's modest, but still an improvement over past tax policy.
If you are able and intend to itemize now, you may want to accelerate your giving in 2025 (rather than wait until 2026) since the new, more restrictive deduction rules apply after 2025. That helps you lock in the current (more favorable) deductibility.
Again, if you are an itemizer, consider “bunching” gifts: i.e., making a larger gift this year (2025) that covers, say, two years' worth of intended giving so that you get the benefit in a year where you itemize, and in subsequent years you take the standard deduction (and maybe use the non-itemizer deduction).
If you have an individual retirement account (IRA) and are over the required minimum distribution age, consider a Qualified Charitable Distribution (QCD) to Data Science Alliance. A QCD lets you transfer up to $100,000 per year directly from your IRA to a qualified charity without having to include the distribution in taxable income. It also counts toward your Required Minimum Distribution. If you're choosing not to itemize because of the standard deduction, a QCD is especially attractive. And for those who itemize, it sidesteps the impacts of the 0.5% AGI floor and the 35% cap on tax savings.
If you hold appreciated stock, mutual funds, or other securities, you may still want to consider a direct transfer of those assets (rather than selling and donating the proceeds). This allows you to avoid capital gains tax and may enhance the value of your gift. Even though the new law does not change the fundamental logic of that strategy, it's more important than ever, given the shifting deductibility rules.

A Message from DSA

“We believe that your mission-driven philanthropy remains as important as ever. The tax code is simply the framework for your own personal plans. We encourage you to discuss your giving strategies with your tax professional, and, if you are thinking of making a gift to support us (or other charities), to do so thoughtfully and proactively. If you are considering a gift this year in light of these changes, please feel free to reach out — we're happy to walk through options with you (or your advisor) and help you maximize both your philanthropic impact and your tax-wise planning.”