Three Changes to the Charitable Deduction, and What They Cost a Kansas City Donor in 2026
Imagine a donor who gives the same $6,000 to the same four charities in 2026 that she gave in 2025. Her income has not changed. The charities have not changed. Even the checks look the same.
Her tax deduction may not.
Three provisions of the 2025 tax law took effect on January 1, 2026, and together they change how charitable deductions work.
None of this means charitable giving has become unattractive. For many households, charitable contributions will continue to provide meaningful tax benefits. But when you give, what you give, and how you give it now matter more than they did before.
And because most charitable planning for the 2026 tax year has to be completed by December 31, September is a much better time to begin thinking about these decisions than the final few weeks of the year.
The first 0.5 percent of your income no longer counts
Beginning with the 2026 tax year, taxpayers who itemize can deduct charitable contributions only to the extent those contributions exceed 0.5 percent of adjusted gross income, or AGI.
AGI is essentially your income after certain adjustments. You can find it near the bottom of the first page of your federal income tax return.
The easiest way to understand the new rule is with an example.
Suppose a married couple has $400,000 of AGI.
Their charitable deduction floor is:
$400,000 × 0.5% = $2,000
If they contribute $6,000 to charity, only $4,000 clears the floor and becomes deductible.
They still gave $6,000 to charity. The charities still received $6,000. But for federal income-tax purposes, the first $2,000 does not produce an itemized charitable deduction.
Consider another example. A single taxpayer with $175,000 of AGI has an $875 charitable floor. If she gives $500 to her church during the year, her entire contribution falls below the floor and produces no itemized charitable deduction.
That makes this rule unusual. Historically, the charitable deduction has primarily been limited by ceilings—rules restricting how much someone can deduct relative to income. This is a floor, meaning a certain amount of giving has to occur before the deduction begins.
C corporations face a similar new rule, with a floor equal to 1 percent of taxable income. That can be especially relevant for closely held businesses in Johnson County and on the Missouri side of the Kansas City metro.
There is also an important detail about contributions lost to the new floor.
Amounts disallowed by the floor can generally be carried forward only when the taxpayer also has contributions disallowed under the percentage-of-income ceilings. If your contributions are comfortably below the 60 percent-of-AGI limit for cash gifts—which the same law made permanent—the deduction lost to the 0.5 percent floor may simply be lost.
That makes planning the timing of charitable gifts considerably more important.
In the top bracket, a dollar of deduction is now worth 35 cents
The second change primarily affects taxpayers in the highest federal income-tax bracket.
For 2026, the 37 percent bracket begins at $640,600 of taxable income for single filers and $768,700 for married couples filing jointly.
For taxpayers in that bracket, itemized deductions are reduced by 2/37ths, or approximately 5.4 percent, of the lesser of:
- total itemized deductions, or
- the amount of taxable income falling within the 37 percent bracket.
That sounds complicated, but the practical result is easier to understand.
For income taxed at 37 percent, a dollar of itemized deduction that previously could have saved as much as 37 cents in federal tax now saves no more than approximately 35 cents.
On a $100,000 charitable deduction, that difference can represent about $2,000 of lost tax benefit.
And that reduction comes after considering the new 0.5 percent charitable floor.
The rule is not limited to charitable contributions. It applies more broadly to itemized deductions, which means deductions such as mortgage interest and state and local taxes can be affected as well.
For households whose income varies from year to year, this creates an interesting planning question.
Suppose you are considering a large charitable gift and expect your taxable income to fall into the 37 percent bracket this year but the 35 percent bracket next year. It may be worth comparing the two years before deciding when to make the contribution. A deduction taken while you are firmly in the 35 percent bracket may receive essentially the same marginal tax benefit without being subject to the additional 2/37ths reduction.
The lesson is not that everyone should delay a gift. It is that the tax year in which the deduction occurs now deserves more attention.
There is now a deduction for people who do not itemize
The third change is actually good news for many taxpayers.
Beginning in 2026, taxpayers who claim the standard deduction may also deduct up to $1,000 of qualifying cash charitable contributions, or $2,000 for a married couple filing jointly, without itemizing.
That matters because most American households use the standard deduction.
For 2026, the standard deduction is $16,100 for a single filer and $32,200 for a married couple filing jointly. Historically, households taking the standard deduction generally received no additional federal income-tax benefit from charitable contributions.
The new rule changes that.
There are three important limitations to understand.
First, the contribution must be cash. A donation of appreciated stock does not qualify for this particular deduction.
Second, the gift must generally go directly to a qualifying public charity. Contributions to donor-advised fund sponsors and most private foundations do not qualify.
Third, the $1,000 and $2,000 limits are not indexed for inflation. Unless Congress changes the law in the future, their purchasing power will gradually decline.
Still, for households that give regularly but do not contribute enough to itemize, this is a meaningful improvement.
Bunching stopped being optional
The new charitable floor makes a planning strategy known as bunching significantly more valuable.
The reason is straightforward: the 0.5 percent floor applies each year.
If you spread the same amount of charitable giving across multiple tax years, you may have to clear that floor multiple times.
Return to our married couple with $400,000 of AGI.
Their annual charitable floor is $2,000.
Suppose they give:
- $6,000 in 2026, and
- $6,000 in 2027.
They contribute $12,000 over two years, but the $2,000 floor applies in each year.
Their total deductible contributions are therefore $8,000.
Now suppose they contribute the entire $12,000 during one year instead.
The $2,000 floor applies only once, leaving a $10,000 charitable deduction.
Same $12,000 given to charity. Same charitable intent. But $2,000 more potentially deductible simply because of timing.
A donor-advised fund can make this strategy easier.
With a donor-advised fund, you can make a larger contribution during the year in which you want the charitable deduction, while still distributing grants to your favorite charities gradually over time.
For example, instead of giving $6,000 directly to several charities every December, you might contribute several years' worth of planned giving to a donor-advised fund in one year. You receive the charitable deduction when the donor-advised fund is funded, and then recommend grants to the individual charities on your normal schedule.
Appreciated investments can make the strategy even more efficient.
If you contribute publicly traded stock that you have owned for more than one year, you can generally deduct its fair market value while also avoiding the capital-gains tax you might otherwise owe if you sold the shares first and donated the cash.
The Greater Kansas City Community Foundation is one of the larger donor-advised fund sponsors in the country and is headquartered here in Kansas City, making it one practical option for donors who prefer to have their charitable giving administered locally.
There is another strategy that can work alongside bunching.
During the “on year,” you make a larger charitable contribution and itemize, potentially clearing the 0.5 percent floor only once.
During the “off year,” you take the standard deduction but continue making some ordinary cash gifts directly to qualifying charities. Those contributions may qualify for the new $1,000 or $2,000 deduction available to non-itemizers.
The important distinction is that those off-year gifts generally need to be made directly to the charities, because contributions to a donor-advised fund do not qualify for the new non-itemizer deduction.
Used thoughtfully, the strategy can look something like this:
On year: Larger contribution → itemize → clear the charitable floor once.
Off year: Standard deduction → make qualifying direct cash gifts → claim the new limited charitable deduction.
This is another example of the broader idea we discussed in Tax Strategy Is a Year-Round Game: good tax planning often comes from deciding when to complete a transaction, not simply whether to complete it.
2026 Tax Year
What the 0.5% Floor Does to Your Charitable Deduction
Enter your numbers to see how much of your giving is deductible this year, and what changes if you give two years worth in one year instead of splitting it.
This year, as you are giving now
Split across two years
Same amount each year. The floor applies twice.
Bunched into one year
Two years of giving in a single year. The floor applies once.
At the 37% rate: itemized deductions are reduced by 2/37ths, which caps the benefit at roughly 35 cents per dollar. The figures above apply that cap.
Assumes you itemize in the year the gift is deducted, that the giving is within the percentage-of-income ceilings, and that the deduction is claimed at a single marginal rate. Bunching is usually done through a donor-advised fund, which lets you take the deduction in the year you contribute and grant the money out later.
Figures are estimates for illustration and exclude state tax, the alternative minimum tax, and any interaction with other deductions.
The state line changes the answer
Kansas City adds another wrinkle because taxpayers routinely live in one state and work in the other.
Kansas and Missouri do not handle itemized deductions in exactly the same way.
Kansas allows taxpayers to itemize deductions on their Kansas income-tax return even if they use the standard deduction on their federal return.
That is an important distinction.
A Kansas taxpayer may have charitable contributions that are not large enough to make federal itemizing worthwhile but that still provide a deduction on the Kansas return.
Missouri generally works differently. Under Missouri law, a resident may elect Missouri itemized deductions only when federal taxable income was determined using itemized deductions, and Missouri's calculation begins with allowable federal itemized deductions.
In other words, crossing State Line Road can change the calculation.
There is one additional question we will be watching carefully: exactly how Kansas will incorporate the new federal 0.5 percent charitable floor into its own Schedule A for 2026.
Rather than assuming Kansas will automatically follow the federal treatment—or assuming that it will not—the better approach is to confirm the rule when the Kansas Department of Revenue publishes its 2026 individual income-tax instructions.
Over 70½, you may be able to avoid the floor entirely
For charitably inclined IRA owners over age 70½, there is another option worth understanding: the qualified charitable distribution, or QCD.
A QCD allows money to move directly from an IRA to a qualifying charity.
The key difference is that the distribution generally does not become part of your adjusted gross income in the first place.
That means the charitable deduction floor does not apply.
Neither does the new 2/37ths reduction.
And because the benefit occurs by excluding the IRA distribution from income rather than claiming an itemized deduction, you do not have to itemize for the strategy to work.
For 2026, the QCD limit is $111,000 per person. A married couple in which both spouses have their own eligible IRAs could therefore potentially direct as much as $222,000 through QCDs.
Eligibility begins at age 70½, even though required minimum distributions begin later.
Once RMDs do begin, a properly completed QCD can also count toward satisfying the required distribution for the year.
For a retiree who is already planning to give to charity and has substantial assets in an IRA, that combination can make the QCD especially attractive.
There can be benefits beyond the charitable deduction itself.
Because a QCD keeps the distribution out of AGI, it may also help reduce income used to determine:
- Medicare IRMAA surcharges,
- the taxable portion of Social Security benefits, and
- certain other income-based tax calculations.
The mechanics matter. The funds need to move directly from the IRA custodian to the qualifying charity, and donor-advised funds generally cannot receive QCDs.
What to look at before December
If your expected charitable contributions are close to the floor, it may be worth considering whether contributions should be accelerated into 2026 or combined with planned 2027 giving rather than spread evenly across both years.
Next, look at what you are giving, not simply how much.
If you own investments with substantial unrealized gains, donating appreciated shares may be considerably more tax-efficient than writing a check.
Instead of selling stock, realizing capital gains, paying tax and donating cash...
...you may be able to donate stock, avoid realizing a capital gains, and receive a charitable deduction.
That can be particularly useful for investors trying to reduce a concentrated stock position. We discussed the broader concentration issue in Are You Actually Diversified?
Finally, business owners should look at charitable planning alongside their other year-end tax decisions rather than treating each strategy separately.
For C corporations, the new 1 percent charitable floor can interact with other deductions. The restored 100 percent bonus depreciation, for example, can reduce taxable income and therefore change the dollar amount of the corporate charitable floor.
One decision changes the numbers for another.
That is why charitable planning is increasingly becoming less about asking, “How much did we give this year?” and more about asking:
“What are we giving, when should we give it, and which account should it come from?”
Those are questions worth answering before December.
Current federal tax brackets, deductions, and other thresholds are available on our 2026 tax reference page.