Charitable Contributions At a Glance & How OBBB Can Impact You

In general, charitable contributions can mean trips to goodwill or donations to a qualified 501c(3) which includes many organized religions religious buildings like tithe to a church. If you itemize, charitable contributions can help lower your tax liability by lowering your adjusted gross income. If you make a donation (cash/noncash) above $250 you are required to have contemporaneous documentation which could include something like the below.

This is a meets the documentation required by the IRS for charitable contributions. It would have the name of the charity, amount, date, and description of what was donated.

If the noncash amount is above $500, an additional form, Form 8283 is required. This will require your tax accountant to answer more questions, such as the FMV (Fair Market Value) of the goods donated. Other things, such as the method used to determine FMV (For ex. cost to replace it), how was the property originally acquired, and the donor’s original basis. (For ex. How much did you pay for the couch when you bought it) This only gets more stringent as the value of the donated goods is increased.

But enough with the reporting background. Lets get to the meat and potatoes of what you will be looking at for the 2025 and potentially future tax years. With the OBBA (One Big Beautiful Bill Act) changes to the tax code, this changes the charity contributions across the board for everyone.

The 1st most important change: Non-itemizers can claim a donation and apply it to their tax liability.

If you are like the majority of American Taxpayers and use the standard deduction, before you weren’t able to utilize charitable contributions as you can’t utilize the standard deduction on top of itemizing. It’s one or the other. In 2026, thats changing. Taxpayers who are in the standard deduction group can claim one thousand dollars or two thousand dollars of a deduction depending on their filing status. Donations to donor-advised funds and private non-operating foundations do not apply.

The 2nd change: Deduction AGI (Adjusted Gross Income) Floor

Folks may recognize a deduction floor if they have dealt with trying to utilize medical expenses on their income tax return. The same applies here starting next year. Donations will only be deductible after 0.5% of the taxpayer’s AGI. Nothing like the seemingly massive 7.5% in comparison AGI floor for medical expenses, but something to keep in mind. So if you donate $1k, and your AGI is $50k, the first $250 is not deductible but the rest is. Even if you use the standard deduction. Something to keep apprised on.

The 3rd change: Higher permanent cap on cash donations

The TCJA (Tax Cuts and Jobs Act) Trump era legislation capped cash donations to public charities at 60% of the taxpayers AGI. The passing of the OBBB solidifies this change instead of sunsetting back to 50% where it was pre-2017.

Jacob Ashurov, EA