2026 Charitable Giving Tax Changes: Navigating the OBBBA and the 0.5% AGI Floor
Ryan Millan, CPA
The New Math of Generosity: Navigating Charitable Giving Under the OBBBA
Why your 2026 tax strategy needs a "Giving Audit" to absorb the new provisions.
For years, the rhythm of charitable giving was predictable: you give, you keep the receipt, and you deduct. But as we look toward 2026, the legislative landscape has fundamentally shifted under the One Big Beautiful Bill Act (OBBBA).
At Millan, we believe that tax law shouldn’t dictate your heart, but it should certainly inform your pen. The OBBBA introduces a "floor" for some and a "door" for others, fundamentally changing the math for high-net-worth donors and standard-deduction filers alike. Whether you are a lifelong philanthropist or a casual donor, here is how the new rules change the game-and how you can stay ahead of them.
The "Above-the-Line" Win for Non-Itemizers
- Perhaps the most surprising "olive branch" in the new legislation is the return of the above-the-line deduction for those who don’t itemize. If you typically take the standard deduction, the OBBBA now allows you to deduct cash contributions up to:
$1,000 for single filers.
$2,000 for married couples filing jointly.
The Catch: This is strictly for cash gifts (checks, credit cards, payroll deductions). If you were planning on using a Donor-Advised Fund (DAF) to claim this specific deduction, the IRS has closed that door-DAF contributions do not qualify for this non-itemizer perk.
The 0.5% Hurdle: A New Reality for Itemizers
For our clients who itemize, the 2026 rules introduce a "deduction floor" that requires a bit of a calculator. Under the OBBBA, you must now exceed a 0.5% Adjusted Gross Income (AGI) floor before your charitable gifts provide a tax benefit.
The Math in Motion: If your AGI is $400,000, the first $2,000 of your charitable giving is no longer deductible. Only the amounts above that $2,000 threshold move the needle on your tax return.
This change effectively "taxes" the first few dollars of your generosity, making small, routine donations less tax-efficient for higher-income households. This is where strategic tax advisory becomes essential.
Three Strategies to Maximize Your 2026 Impact
1. The "Bunching" Strategy
If the 0.5% floor threatens to eat your deduction every year, consider "bunching." Instead of giving $5,000 annually, you might give $15,000 every three years into a Donor-Advised Fund. This allows you to far exceed the AGI floor in the "on" year while maintaining your grant-making to charities during the "off" years.
2. The QCD "Super Weapon"
For those aged 70½ or older, the Qualified Charitable Distribution (QCD) remains the gold standard. Because a QCD moves money directly from your IRA to a charity without ever hitting your AGI, it bypasses the 0.5% floor entirely. This remains one of the most resilient tax-saving tools in the OBBBA era.
3. Donating Appreciated Assets
Strategically donating appreciated stock or real estate remains a premier maneuver for high-net-worth individuals and medical professionals. This approach offers a distinct "double win": it eliminates the capital gains tax liability on the appreciation while allowing the full fair market value of the asset to be used to clear the 0.5% AGI floor. This converts a potential tax liability into a tangible contribution with far greater efficiency than a standard cash donation, effectively accelerating your path toward the 2026 tax benefits.
Frequently Asked Questions
Does the 0.5% floor apply to my church tithe? Yes. All itemized charitable contributions are subject to the floor, regardless of whether they are religious or secular.
Can I still use my Donor-Advised Fund (DAF)? Absolutely. DAFs remain a premier tool for "bunching" donations to clear the new AGI floor. However, they cannot be used for the new "non-itemizer" above-the-line deduction.
Is the OBBBA permanent? Like most tax legislation, these provisions have sunset dates. Staying in touch with your CPA team is the best way to ensure your 5-year plan stays on track.
Where can I read more about the OBBBA specifics? For a deep dive into the new OBBBA provisions, reference our article with summarized tables based on filing status.
Where can I make a tangible difference with my charitable donations? While we provide the strategy for your tax planning, the impact of your giving is personal. Many of our clients find deep value in supporting regional land stewardship and environmental preservation. We invite you to explore the Conservation Missions we celebrate to see how philanthropic strategy translates into the protection of the Texas landscape.
