A Nonprofit’s Guide to the 2026 Charitable Giving Tax Changes

The tax laws signed this summer through the One Big Beautiful Bill will go into effect in 2026, changing how donors in the U.S. can itemize their charitable gifts. Proactive nonprofit professionals need to understand these legislative changes and how they will affect donor motivations. Now is the time to plan your messaging strategy to incentivize donors to give — and give more — in 2026.  

A Great Opportunity with Everyday Donors 

There is great news for the vast majority of your supporters. The law creates a permanent universal charitable deduction, which is a powerful incentive for the more than 90% of Americans who do not itemize their taxes. Starting in 2026, these non-itemizers can deduct cash donations up to $1,000 for individuals and $2,000 for joint filers.  

Your nonprofit should begin preparing its 2026 communications now to explain this benefit clearly. Consider how to best frame this incentive to different types of supporters. For example, a donor who gives several $500 gifts to different charities throughout the year might max out their deduction quickly. For this reason, a beginning-of-the-year campaign focused on this tax benefit could be more compelling than a traditional year-end appeal. For donors who are unlikely to reach the maximum threshold, a year-end reminder might be the perfect nudge to make an additional qualifying gift. 

A Mixed Landscape for Major Donors and Corporate Partners 

The situation for your mid-level and major donors who itemize their deductions is more complex. Two provisions will significantly alter their giving incentives. 

First, a 0.5 percent Adjusted Gross Income (AGI) floor is being introduced. This means itemizers can deduct only those charitable contributions that exceed 0.5% of their AGI. For a donor with an AGI of $300,000, for instance, their first $1,500 in donations would not be deductible. 

Second, the value of itemized deductions for those in the highest tax bracket will be capped at 35%, a reduction from the current 37%. Although this two-point drop seems modest, research projects it could reduce overall charitable giving by billions over the next decade, as high-wealth donors are often mindful of tax implications. 

These changes will likely encourage a practice known as “bunching.” Donors may choose to give two or three years’ worth of contributions during a single year to surpass the AGI floor and maximize their tax benefit. This could also make Donor-Advised Funds (DAFs) more appealing. 

Your organization should engage major donors now, before these changes take effect. Talk to them about maximizing their deductions in 2025 under the current, more favorable rules. You should also prepare for 2026 by developing multi-year pledge structures that accommodate bunching strategies and ensure that your internal processes for managing DAF gifts are seamless. 

These same bunching behaviors are expected from corporate partners, who will face a 1% AGI floor on their charitable deductions. Proactive conversations and flexible, multi-year commitment options will be key to maintaining this support. 

Preparing for the Future 

The fundamental human desire to give will always be the most powerful driver of philanthropy. Yet these tax laws create an important context for direct response fundraising. By understanding the nuanced impacts on different donor groups and developing targeted educational strategies, your organization will be in the best position to grow support for continuing your vital work.