The IRS has updated guidance on charitable contribution deductions for the 2025 and 2026 tax years, introducing new limits and eligibility thresholds. Taxpayers should anticipate changes in how much they can deduct and under what conditions.
- 60% AGI cap on cash donations to public charities for 2025 and 2026
- 30% AGI limit for non-cash contributions, extendable to 50% under certain conditions
- Five-year carryover for unused charitable deduction amounts
- IRA qualified charitable distributions remain capped at $100,000 annually
- Standard deduction increases may reduce incentive to itemize
- Provisions extend through 2026 without further legislative change
The IRS has released updated parameters for charitable contribution deductions applicable to the 2025 and 2026 tax years, affecting individual filers who itemize. A key change allows taxpayers to deduct up to 60% of their adjusted gross income (AGI) for cash donations to qualifying public charities, a cap that remains unchanged from prior years. However, non-cash contributions, such as appreciated securities or property, are now subject to a 30% AGI limitation unless donated directly to a public charity, which may qualify for a higher 50% cap under specific conditions. For 2025, the standard deduction is set at $14,600 for single filers and $29,200 for married couples filing jointly. With the increased standard deduction, fewer taxpayers are expected to itemize, making the charitable deduction less universally accessible. Nonetheless, high-income individuals and those with significant donations may still benefit from timing gifts to maximize deductions. The carryover rule remains at five years for unused charitable deductions, meaning excess contributions beyond the AGI limits can be carried forward. Additionally, qualified distributions from IRAs to charities remain tax-free, with a $100,000 annual limit per individual, a provision extended through 2026 under current tax law. These changes are expected to influence donor behavior, particularly among high-net-worth individuals and foundations. Charities may see shifts in contribution timing, with greater emphasis on pre-2025 and post-2026 giving to align with tax planning windows. Financial advisors are encouraging clients to assess donation strategies well in advance to leverage the full benefit of these provisions.