Today is Giving Tuesday 2025.
The Tuesday after Thanksgiving, dubbed Giving Tuesday when it was initiated in 2012, is now the unofficial kick-off of the annual end-of-year charitable season.
Most people don’t give to good causes because they get tax breaks. Thank goodness for that, since the 2017 tax reform bill made it more difficult to claim a charitable deduction for donations.
But the latest Republican tax reform law, the One Big Beautiful Bill Act (OBBBA) signed into law on July 4, included some charity tax changes.
One revived the charitable donation tax break for those who claim the standard deduction. Another, however, shaves a bit of the tax benefit for giving from very wealthy donors.
Here’s a look at the new tax rules regarding donations, and how the coming changes — both rules don’t start until the 2026 tax year — could affect your year-end philanthropic plans. Plus, there’s some added basic giving tips.
Larger donations for standard deduction claimants: The OBBBA created a new above-the-line charitable deduction of up to $1,000 for individual taxpayers who claim the standard deduction. It goes up to $2,000 for married jointly filing couples who don’t itemize.
This change is similar to the same kind, but smaller, tax deduction offered to non-itemizers during the height of the COVID-19 pandemic.
The Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 allowed donors who claimed the standard deduction to get a $300 tax break for that year directly on Form 1040. In late December 2020, the non-itemizing deduction was extended and expanded for 2021. The COVID-era benefit, however, ended in 2022.
The good news about this latest iteration of the tax deduction for charitable non-itemizers is that it is permanent. So, these donors don’t have to worry about when they might lose this tax break.
But we are talking taxes, meaning there are some limits.
Standard givers’ limits, and strategies: First, as noted earlier, this tax break does not take effect until 2026. So, gifts you gave, or will give, by Dec. 31 won’t do you any good on the 2025 tax return you file next year.
However, the start date does give you time for charitable tax planning.
Instead of maxing out your planned gifts this month, push them into January 2026. The time shift will not affect your favorite charity that much. In fact, the nonprofit probably would find getting a bigger gift a few days later is a trade it’s willing to make.
Also, note that only cash donations qualify for the non-itemizer above-the-line charitable deduction. Cash, in IRS terms, means actual currency, as well as contributions by credit or debit card gifts, as well as old-fashioned paper checks. You can still donate lightly used clothing and household goods, but the value of those items does not count toward the $1,000 (or $2,000 depending on your filing status) tax break.
Similarly, gifts to donor-advised funds (DAFs) don’t count here. A DAF is a charitable giving vehicle administered by a public charity that manages donations on behalf of individual donors.
What this basically means is that your cash donation must go to an Internal Revenue Service authorized public charity that has been granted 501(c)(3) status.
Finally, while the $1,000 for single filers and $2,000 for married jointly filing couples is a nice donation amount, it is statutorily set. Those amounts will not be adjusted each year for inflation.
Changes for charitable itemizers: While the OBBBA gave to donors who claim the standard deduction, it took away some from those who still itemize their charitable gifts.
First, starting in 2026, there will be a 0.5 percent adjusted gross income (AGI) floor on all contributions. This means that only the qualifying charitable amounts that exceed 0.5 percent of a taxpayer’s AGI are deductible.
For example, a taxpayer with AGI of $100,000 will not be able to claim the first $500 in donations on Schedule A.
This deduction floor applies to all taxpayers, not just the wealthiest. But the richest donors also will take another tax break hit. They will face a 35 percent cap on their deductions’ value.
Taxpayers in the top 37 percent tax bracket will see their tax benefit from all itemized deductions — not just charitable contributions — capped at a 35 percent tax rate. From the charitable gift perspective, top tax-rate filers who donate $10,000 will receive just a $3,500 tax deduction instead of the $3,700 they would have received under the current system.
These changes mean itemizing donors want to do the opposite of their philanthropic standard deduction counterparts. They want to give as much as possible in 2025 before the 2026 limits take effect.
In addition to simply writing checks to favorite charities, wealthier itemizers also should look into opening a DAF and contributing a large amount to it by the end 2025. The DAF gift will provide an immediate itemized tax deduction. Then the DAF money, which typically is invested so it will grow, can be used for future donations.
And as long as you’re giving now, get to cleaning out your house. You can add the value of goods donated. It also can help you clear space for all the Christmas gifts you’re expecting to receive.
Finally, even though donation deduction law has been tweaked, the basic tax rules still apply. Here are three to note.
Check out your charity: First, to be tax deductible, donations generally must go to an IRS-approved organization. If the nonprofit does not have the previously mentioned 501(c)(3) designation, the IRS will disallow your deduction.
There are more than tax reasons for making sure your chosen charity is on the up-and-up. You obviously want to ensure that the nonprofit is reputable and makes good use of your (and all) donations.
In the two decades that I’ve been tax blogging, I’ve regularly told Don’t Mess With Taxes readers to always check the IRS’ online Tax Exempt Organization Search tool to ensure that the group is on the up-and-up. But in 2022, Uncle Sam’s tax agency screwed up some charity validations, as noted in my post IRS approves some fake charities. What’s a donor to do now?
The IRS approval process is back on track, but that post has additional suggestions on checking out charities. You can get second or third opinions on the legitimacy of your chosen charities at some outside watchdog sites.
There is Charity Navigator, as well as Candid, which is the combined effort of GuideStar and Foundation Center. There’s also the Better Business Bureau’s Wise Giving Alliance and Charity Watch. All of these charity oversight groups are themselves nonprofits.
Note donation deduction maximums: You can generally deduct up to 60 percent of your AGI.
A quick, for illustration purposes only example is Joe, with a $100,000 AGI, and who gives $70,000 to his alma mater. (You can come up with your own story about how Joe can live on just 30 grand.) When generous Joe files his tax return, he can claim only $60,000 on his Schedule A. He can, however, carry forward the $10,000 and deduct it on future tax returns for up to five years.
There’s a 50 percent limit for non-cash contributions. Tax code rules say cash gifts are deducted before non-cash gifts, limiting the applicability of the higher limit for those who make both cash and non-cash donations.
There’s also a percentage limit on donations of long-term appreciated property. These gifts of assets you’ve held for more than a year are generally deductible at fair market value. The limit here is 30 percent of your AGI.
Be ready to verify your charitable gift: Tax law requires you to get a receipt when your gift of cash or property is worth more than $250.
Officially, the IRS says you need a written letter of acknowledgment from the charity. The letter must include the amount of cash you donated, whether you received anything from the charity in exchange for your donation, and an estimate of the value of those goods and services.
If your gift is less than the receipt trigger amount, get one anyway. It’s just good to have that confirmation in your tax records, regardless of how much you give.
Reputable nonprofits are well aware of the IRS’ documentation demand, so most will give you a receipt upon receiving your gift. They often then send a second thank you acknowledgment at the start of the next year when you’re getting ready to file.
In most cases, you don’t have to submit the receipts along with your tax return. You do, however, need to have the gift verifications handy if the IRS has any question about your philanthropic efforts.
Even before the OBBBA changes, getting a tax deduction for a charitable donation required more than just writing a check to your favorite goodwill group. If you have questions about whether you can take tax advantage of your gifts, check out IRS.gov’s interactive Can I deduct my charitable contributions? Or, of course, consult a tax professional.
It will take some extra effort, both for 2025 returns and in 2026 under the new OBBBA changes to correctly claim your donations, regardless of whether you itemize or use the standard deduction. But it’s usually worth it to ensure both you and your chosen charity get the most out of your contributions.
