With the holiday season in full swing, many taxpayers feel led to donate to their favorite charities to share in the holiday spirit of giving. The One Big Beautiful Bill Act (OB3), signed into law in July 2025, contains changes to current tax law that provide some planning opportunities around charitable giving.
Currently, charitable contributions are deducted as part of the itemized deduction. Starting in 2026, non-itemizing taxpayers will be able to deduct up to $1,000 ($2,000 for joint filers) of charitable contributions in addition to the standard deduction. This change was made permanent in OB3. Non-itemizers may want to consider deferring donating until after 1/1/2026.
The rules are also changing for itemizing taxpayers. There is now a 'floor' for the charitable contribution deduction. This floor is 0.5% of adjusted gross income (AGI). For example, if AGI is $100,000 then the first $500 ($100,000 * 0.005) does not qualify for the deduction. Itemizing taxpayers may want to consider making some of their planned 2026 donations before the end of 2025 to avoid that floor.
If you would like more information on charitable giving and how you can maximize your charitable contribution deduction, please call the office at 712-256-5642.
***Content summarized from "Tom Talks Taxes" by Thomas A Gorczynski, EA, USTCP.
