Charitable tax law changes for 2026: Keeping your tax advisors in the loop

A message from the CICF Collaborative, including Central Indiana Community Foundation, Hamilton County Community Foundation, IMPACT Central Indiana, the Indianapolis Foundation, and Women’s Fund of Central Indiana 

Written by

Clark Collier, CAP®, Director of Giving Strategies

Robin Elmerick, Senior Director of Effective Philanthropy

A new year presents an excellent opportunity to check in on your charitable giving priorities. This is especially important in 2026: new tax laws may impact charitable giving strategies for some people. 

Here are the changes that you’ll want to be aware of, and, most importantly, share with your tax advisors as soon as possible to determine how these changes might impact your situation.  

New threshold to itemize charitable deductions 

Beginning this tax year, charitable contributions will only be deductible to the extent that they exceed 0.5% of a taxpayer’s adjusted gross income. In other words, a portion of charitable giving will no longer generate a tax benefit. For example, a taxpayer with an adjusted gross income of $200,000 will see no deduction for the first $1,000 of charitable contributions made in a year. Only donations above that amount will be eligible for deduction, subject to existing percentage-of-income limits. This new rule functions much like a deductible in an insurance policy, raising the effective threshold for receiving a tax benefit and reducing the incentive for smaller annual gifts among itemizers. 

Limitation on itemized charitable deductions for high-income taxpayers 

Taxpayers in the 37 percent bracket will no longer be able to offset their income at their full marginal rate when making charitable gifts. Even if a donor is in the highest federal income tax bracket, the tax benefit of a charitable deduction will be limited to 35 percent of the contribution.   For example, a taxpayer in the 37% bracket who makes a $100,000 charitable contribution would previously have received up to $37,000 in federal tax savings. Under the new limitation, the maximum tax benefit would be $35,000 instead. 

Good news for the 60% cap 

A long-standing rule that allows cash gifts to qualified public charities to be deducted up to 60% of adjusted gross income was made permanent. After satisfying the new 0.5% AGI floor, donors may continue to deduct cash contributions up to this level, while non-cash gifts or contributions to certain types of organizations remain subject to lower percentage limits. This permanence preserves a relatively generous framework for major philanthropy even as other rules become more restrictive. 

New incentive for non-itemizers 

Individuals who claim the standard deduction can now take a limited deduction above the line, meaning it reduces income before adjusted gross income is calculated. Single filers may deduct up to $1,000, while married couples filing jointly may deduct up to $2,000, provided the contributions are made in cash. This deduction is available in addition to the standard deduction and represents a meaningful expansion of tax benefits for charitable giving among non-itemizers, many of whom have received no tax benefit for donations in recent years. Note, however, that gifts to donor-advised funds are not eligible for this deduction, and neither are noncash gifts. This is unfortunate because both gifts to donor-advised funds and gifts of highly appreciated assets are useful tools that incentivize charitable giving for emerging philanthropists. 

QCDs may be even more useful 

Retirees and older taxpayers will also see an important adjustment through an increase in the Qualified Charitable Distribution limit. Beginning in 2026, the annual amount that can be transferred directly from an individual retirement account to a qualified charity will increase, allowing taxpayers age 70 ½ and older to direct more funds to charitable causes without including those distributions in taxable income. Because QCDs can also count toward required minimum distributions, this higher limit enhances a tax-efficient giving strategy that is unaffected by itemized deduction limits, adjusted gross income floors, or caps on deduction value. 

Limitations on corporate charitable deductions 

Starting in 2026, corporations may deduct charitable contributions only to the extent that those contributions exceed 1 percent of taxable income. This new floor is likely to influence corporate giving strategies, particularly for businesses that make consistent but relatively modest charitable contributions. The existing 10% cap on corporate charitable deductions remains in place.  

Again, we strongly encourage you to forward this information to your tax advisors. Feel free to loop us into the conversation so that we can ensure that you’re set up to meet your charitable goals for 2026 through strategies that also align with your financial objectives. Whether you cc us on an email, ask your advisor to get in touch with us directly, or pull everyone together on a virtual call, the CICF Collaborative team is here for you and we look forward to the conversation!  

About the CICF Collaborative 

CICF Collaborative is a partnership of philanthropic organizations working together to strengthen communities across the region. Each entity within the CICF Collaborative (including the cornerstone entities, Central Indiana Community Foundation, Hamilton County Community Foundation, IMPACT Central Indiana, the Indianapolis Foundation, and Women’s Fund of Central Indiana) brings deep knowledge, strong relationships, and its own individual, focused mission. The CICF Collaborative unites the entities by providing shared services, allowing the entities to operate more efficiently and effectively. By leveraging what we each do best, we’re able to better serve our communities and create more lasting impact, together. Learn more » 

About the Authors

Clark Collier is CICF’s director of giving strategies, working with individuals, families, and their advisors to structure meaningful and impactful philanthropy. As a Chartered Advisor in Philanthropy ®, Clark provides gift planning support and counsel to the CICF Collaborative and nonprofit organizations throughout the region. He previously served as a philanthropic advisor for CICF and in development roles for both local and global organizations.  

Robin Elmerick, senior director of effective philanthropy has been with CICF since 2019. A certified Impact Philanthropy Advisor, she works closely with fundholders across all entities of the CICF Collaborative to help them define their philanthropic strategies and maximize their impact. With a background in nonprofit leadership and consulting, she is passionate about bridging the needs of the community with the missions of nonprofits and the passions of our fundholders, aligning all three to create meaningful change in Central Indiana and beyond.