New 2026 Charitable Deduction Floors Could Cut Giving by $81 Billion a Decade

New 2026 charitable deduction floors could cut U.S. giving by an estimated $81 billion over a decade, even with a new break for small donors.

New 2026 Charitable Deduction Floors Could Cut Giving by $81 Billion a Decade New 2026 charitable deduction floors could cut U.S. giving by an estimated $81 billion over a decade, even with a new break for small donors. Aaron Rafferty June 26, 2026 Key Takeaways: A new 0.5% of AGI floor on the charitable deduction took effect for the 2026 tax year, so itemizers can no longer deduct the first slice of what they give. The National Council of Nonprofits estimates the new floors and caps will cut charitable giving by about $81 billion over the next decade, more than the roughly $74 billion a new small-donor deduction is expected to add. Donations to donor-advised funds are excluded from the new break for non-itemizers, leaving money parked in DAFs outside the incentive. The charitable deduction that has underwritten American giving for a century quietly changed on January 1, and nonprofits are now doing the math. Under the One Big Beautiful Bill Act, itemizers in the 2026 tax year cannot deduct the first 0.5% of their adjusted gross income in charitable gifts, a floor that erases the deduction entirely for many smaller donors. The mechanics are simple and the effect is not. On a $300,000 income, the first $1,500 of giving no longer counts. C corporations face a similar floor at 1% of taxable income. The National Council of Nonprofits estimates the floors and caps will reduce giving by about $81 billion over the next decade, more than the roughly $74 billion a separate new deduction is expected to generate. That separate deduction is the one piece pointed the other way. Starting this year, people who do not itemize can write off up to $1,000 in cash gifts, or $2,000 for couples, the first such break in years. Gifts to donor-advised funds are carved out, so the dollars that s