Charitable Giving Just Changed for 2026 - 3 New Rules Business Owners Should Know

If charitable giving is part of your personal or family financial plan, 2026 brings a few important changes you’ll want to understand before the end of the year.

The One Big Beautiful Bill Act, also known as H.R. 1 or OBBBA, changes how certain charitable gifts affect your federal tax return. The new rules may influence whether you itemize deductions, how you time your donations, and which assets you choose to give.

That matters even more when you own a business. Your income can change from year to year, especially if you receive pass-through income, sell an interest in your company, take a large distribution, or experience an unusually profitable year.

You don’t need to become a tax expert to make a thoughtful plan. You simply need to understand the basic rules and give yourself enough time to consider your options.

Here are three changes to know for 2026.

Rule 1 - Itemized charitable deductions now have a 0.5% AGI floor

If you itemize deductions, your charitable giving must exceed 0.5% of your adjusted gross income before it creates an itemized deduction.

Think of this as a starting line. The first 0.5% of your AGI in charitable gifts does not count toward your Schedule A deduction. Only the amount above that threshold may be deductible, subject to the other charitable contribution limits that already exist.

For example, imagine your AGI is $300,000.

• 0.5% of $300,000 equals $1,500

• The first $1,500 of eligible charitable gifts produces no itemized deduction

• Only donations above $1,500 may potentially be deductible

  
  

If you give $5,000 during the year, your potentially deductible amount would begin at $3,500 rather than the full $5,000.

This does not mean your first $1,500 of giving has no value. Your charitable support still helps the organizations and causes you care about. It simply means the federal tax benefit may not apply to that initial portion if you itemize.

The floor applies to your total qualifying giving for the year. It is not calculated separately for each donation. That makes the timing of your gifts more important than it may have been in the past.

Rule 2 - Top-bracket taxpayers face a 35% deduction benefit cap

The second change affects taxpayers in the highest federal income tax bracket.

Previously, an allowable itemized deduction could generally produce a tax benefit tied to the 37% marginal tax rate. Under the new rule, the tax benefit for itemized deductions is capped at 35 cents per dollar for taxpayers in the top bracket.

In simple terms, a $10,000 allowable charitable deduction may provide no more than $3,500 in federal tax savings for a top-bracket taxpayer, rather than $3,700.

This cap applies after determining how much of your charitable giving is otherwise deductible. In other words, you may need to consider both limitations.

• First, your giving must exceed 0.5% of AGI

• Next, the remaining deduction must follow the existing charitable contribution limits

• Finally, top-bracket taxpayers may receive a tax benefit of no more than 35 cents per dollar

  
  

That may sound complicated, but the practical takeaway is straightforward. Tax savings can be part of your giving strategy, but they should not be the only factor driving your decisions.

You may also want to consider your business goals, personal cash flow, investment portfolio, family priorities, and the causes you want to support. A strong plan looks at the whole picture rather than focusing on one number.

Rule 3 - Non-itemizers can deduct certain cash gifts

There is also a new opportunity for taxpayers who take the standard deduction.

Beginning in 2026, you may be able to deduct qualifying cash charitable gifts without itemizing.

The maximum deduction is

• $1,000 for single filers

• $2,000 for married couples filing jointly

  
  

This deduction is available in addition to the standard deduction, but there are important limits. It generally applies to cash gifts made directly to qualifying charitable organizations. Gifts to donor-advised funds and private foundations do not qualify for this particular deduction.

You’ll also need to confirm that the organization receiving your contribution is eligible. The IRS search tool for tax-exempt organizations can help you check whether a charity qualifies.

This new rule may be especially helpful if your total itemized deductions do not exceed the standard deduction. In prior years, you could give to charity without receiving a federal deduction if itemizing did not make sense for you. Now, qualifying cash gifts may still provide a limited tax benefit.

Three strategies worth considering

The new rules do not mean you should give more than you can comfortably afford. They do mean that you may want to be more intentional about how and when you give.

Consider bunching several years of donations

If your annual giving falls below the 0.5% AGI floor, you may not receive an itemized deduction in any given year.

Bunching can help. This strategy involves combining several years of planned donations into one tax year so your total giving clears the floor and potentially pushes your itemized deductions above the standard deduction.

For example, suppose your AGI is $300,000 and you typically give $1,000 each year. That amount is below the $1,500 floor, so it may not produce an itemized deduction.

Instead, you might contribute $3,000 in one year and make smaller or no contributions the following year. The timing should always reflect your charitable goals and cash flow, but concentrating gifts may create a more meaningful deduction in the year you give.

A donor-advised fund can make this approach easier. You may contribute to the fund during the year you want the deduction, then recommend grants to eligible charities over time.

The charity still receives support according to your schedule, while you gain more flexibility in managing the timing of your contributions.

Consider appreciated stock instead of cash

If you own investments that have increased significantly in value, donating appreciated stock may be more tax-efficient than selling the shares and giving cash.

When the requirements are met, giving appreciated stock directly to a qualified charity may allow you to

• Avoid realizing the capital gain on the donated shares

• Give the charity the full market value of the asset

• Potentially claim a deduction based on the fair market value

  
  

This strategy can be useful when you have a concentrated position, a highly appreciated investment, or shares you were already considering selling.

There are still rules around how long you have held the asset, the type of organization receiving the gift, valuation, documentation, and AGI limitations. Don’t transfer securities at the last minute without confirming the process with your tax and investment professionals.

Consider a QCD after age 70½

If you are at least 70½ and have a traditional IRA, a qualified charitable distribution may offer another path.

A QCD is a direct transfer from your IRA to an eligible charity. It is not claimed as an itemized charitable deduction. Instead, the distribution generally stays out of your taxable income, up to the applicable annual limit.

Because of how QCDs work, they generally avoid the new 0.5% itemized deduction floor and the 35% itemized deduction benefit cap. They may also reduce your AGI and can count toward a required minimum distribution when handled correctly.

A QCD must be sent directly from the IRA custodian to the eligible charity. Taking the distribution personally and then writing a check generally does not provide the same treatment.

This strategy can be particularly helpful if you are already required to take distributions from an IRA, do not need the money for personal spending, or typically give amounts that fall below the new itemized deduction floor.

Why August is the right time to plan

August may feel early for charitable giving and year-end tax planning. It isn’t.

You still have time to

• Review your expected business and personal income

• Estimate your AGI and potential itemized deductions

• Decide whether the standard deduction or itemizing may be more beneficial

• Identify appreciated investments

• Establish or contribute to a donor-advised fund

• Arrange a QCD through your IRA custodian

• Confirm that charities can accept your chosen type of gift

• Gather receipts and supporting documentation

  
  

By December, many of these decisions become rushed. Investment transfers may take time. Donor-advised funds may require account setup. Your business income may be clearer, but the calendar will be working against you.

If you haven’t reviewed your giving plan yet, fear not. You’re not alone, and there is still time to make thoughtful decisions. The goal is not to turn generosity into a complicated spreadsheet. The goal is to make sure your giving strategy fits your financial life.

For broader guidance, the IRS Publication 526 explains federal charitable contribution rules. You can also review this overview of the 2026 charitable deduction changes.

Your next step

Your charitable giving plan should support the causes you care about while fitting comfortably within your personal and business finances.

Start by gathering three numbers

• Your expected 2026 AGI

• Your typical annual charitable giving

• Your anticipated itemized deductions

  
  

Then consider whether bunching, appreciated stock, a donor-advised fund, or a QCD could make sense for your situation.

At JOLT Strategies, we help business owners look beyond compliance and make financial decisions with greater clarity. Our tax services and advisory services are designed to help you plan ahead instead of reacting when deadlines are already approaching.

Let’s review your 2026 giving plan together while there is still time to act. Schedule your Complementary Tax Strategy session with JOLT Strategies to get started. We’re here to help you navigate the changes, protect your goals, and move forward with confidence.