Contributed by: JanaA, FreeTaxUSA Agent, Tax Pro
In July 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), which includes significant changes to charitable contribution deductions, effective for tax years beginning after December 31, 2025. Here’s a look at the new changes and how they may affect your tax bill.
Above-the-line deduction for standard deduction filers
In the past, charitable contributions have typically only been tax deductible if you itemized your deductions. This above-the-line deduction grants tax relief to non-itemizers who take the standard deduction. They can also claim a deduction for certain cash donations to qualifying charities. The limits to the above-the-line deduction are:
- Single filers (including married filing separately) can deduct up to $1,000
- Married couples filing jointly can deduct up to $2,000.
Donations made to donor-advised funds or private foundations aren’t eligible for this deduction.
For example, if a married couple donates $2,500 to a local food bank and claims the standard deduction, they can also deduct $2,000 of their charitable gift, further reducing their taxable income.
New deduction floor for itemized filers
Itemizing taxpayers face a new threshold requiring that only cash contributions exceeding 0.5% of their adjusted gross income (AGI) are deductible. As a result, smaller donations may not qualify as an itemized deduction unless the combined total surpasses this percentage of AGI.
For example, a single person with an AGI of $100,000 can only claim an itemized deduction for charitable contributions that exceed 0.5% of their AGI—that is, amounts over $500 (0.5% of $100,000).
If they donate $2,000 to a qualified charity, only the portion above $500 qualifies for the deduction. So, their allowable itemized deduction would be $1,500.
Top tax bracket limitation
High-income donors who fall into the top tax bracket (37%) are subject to a new limitation: they may only deduct up to 35% of their charitable contributions, instead of the full 37% rate that matches their income tax bracket.
Permanent 60% AGI limit
The 60% AGI limitation for cash contributions made to certain qualified charities, which was set temporarily in 2017, has now been made permanent.
Key takeaways
These new rules may change the way you choose to donate to a qualified charitable organization. Rest assured that FreeTaxUSA is here to help. Our software is designed to accommodate the latest updates, including automated calculations for revised deduction limits and accurate reporting of charitable contributions.