A FRESH INCENTIVE TO GIVE
Starting in 2026, charitable giving in the United States will enter a new chapter. The introduction of a universal charitable deduction means that any taxpayer will be able to deduct up to $1,000 in cash donations ($2,000 for joint filers) directly given to qualified 501(c)(3) organizations.
For decades, the tax code has primarily rewarded itemizers for charitable contributions—a group that makes up less than 10% of U.S. households in recent years. But this new deduction opens the door for over 90% of taxpayers—those who typically take the standard deduction—to finally benefit from their generosity.
While there are some limits—this deduction applies only to direct cash gifts (not contributions to donor-advised funds or private foundations), and itemizers cannot claim both. The IRS is effectively sending a message: charitable giving should be accessible and incentivized for everyone, not just the mega donors or those with complex tax returns.
WHY THIS MATTERS
This change comes at a pivotal moment. Charitable giving in America continues to reach record dollar amounts, but much of that growth comes from high-net-worth donors. Meanwhile, the share of households making donations has declined, particularly among middle- and lower-income families.
From 2000 to 2018, surveys show a sharp drop in the percentage of American households giving to charity—from about two-thirds to under half. While big gifts keep headline numbers high, everyday donors have been giving less frequently and in smaller amounts when adjusted for inflation.
The new universal charitable deduction could help reverse this trend. By making tax benefits tangible for non-itemizers, it creates a new incentive for first-time donors and reinforces the impact of small gifts.
WHAT’S DIFFERENT FROM THE PAST
It’s worth noting that this isn’t entirely unprecedented. During 2020 and 2021, Congress temporarily allowed a modest above-the-line deduction of up to $300 for individuals ($600 for joint filers). But that measure expired, and non-itemizers were once again excluded.
The 2026 policy makes the deduction permanent and significantly larger—a $1,000/$2,000 threshold that reflects a stronger commitment to broadening participation in charitable giving.
BIG PICTURE: BEYOND THE TAX CODE
This isn’t just about taxes. It’s about encouraging a culture of generosity. For nonprofits, especially for churches, community organizations, and smaller charities that rely heavily on modest donations, the universal deduction may expand their base of support. For households, it’s an opportunity to see philanthropy not just as something for the affluent, but as a shared responsibility with tangible benefits.
In many ways, this is the IRS recognizing what nonprofit leaders have said for years: small gifts matter. And when millions of Americans are empowered to give with both their heart and their wallet, the charitable sector becomes stronger, more resilient, and more representative of the country as a whole.
If this could apply to you, it’s a good idea to speak with a tax professional in preparation for your 2026 return. Remember, the goal of tax planning is not to avoid taxes, but to ensure you pay only what you owe while maximizing your financial resources for your current needs and future goals.
Additional Resources
- “Affluent Americans Increase Donations by 30% Over Past Decade, Even as Fewer Give, Finds 2025 BofA Study on Philanthropy,” Bank of America. Available at: https://newsroom.bankofamerica.com/content/newsroom/press-releases/2025/09/-affluent-americans-increase-donations-by-30--over-past-decade--.html.
- Hannah Martin and Laura Tomasko, “Five Charitable Giving Trends to Watch,” Urban Institute. Available at: https://www.urban.org/urban-wire/five-charitable-giving-trends-watch?
- Peter Gratton, “Are Tax Laws Making Us Stingier? Why Americans Give So Much Less to Charity Now,” Investopia. Available at: https://www.investopedia.com/percentage-of-americans-donating-to-charity-11792300.
Disclosures
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