There’s a new tax break for giving in 2026

Tyler Kert
Tamarack Wealth Management

According to the Giving USA Foundation, Americans gave an estimated $617.2 billion to charitable organizations in 2025. This surpassed $600 billion for the first time. Individuals alone accounted for more than $394 billion of that total.

Those are impressive numbers. I’d argue that giving is one of the most fulfilling things you can do with money. If you don’t believe me, give it a try. Buying something for yourself is enjoyable, but there's something distinctly different about knowing that your money helped someone else. Helping a child purchase school supplies or buying a thanksgiving dinner for a family in need – those are things you will not soon forget.

Back before the Tax Cuts and Jobs Act (TCJA) of 2017, many people were very used to keeping track of their charitable donations. In 2017, before the TCJA was passed, the standard deduction was only $12,700 for a married couple. Most married couples deducted the typical property taxes and mortgage interest and were then rewarded with tax deductions for giving charitably above and beyond the standard deduction amount. However, after the TCJA nearly doubled the standard deduction in 2018, many have gotten out of the habit of keeping track of their charitable gifts because they aren’t making a difference on their tax return anymore. This year, that will change. There's a new tax incentive that makes charitable giving a little more attractive for many Americans.

Beginning in 2026, taxpayers who take the standard deduction can also deduct up to $1,000 of cash charitable contributions. For married couples filing jointly, that amount increases to $2,000. You can now take the standard deduction and still receive a separate deduction for qualifying cash donations to eligible charitable organizations.

Now, to be clear, that doesn't mean the government is giving you $2,000 back. A deduction reduces your taxable income; it doesn't provide a dollar-for-dollar tax credit. If you're in a 24% federal tax bracket, for example, a $2,000 deduction could reduce your federal income tax by roughly $480. So, in other words, it only costs you $1,520 to give $2,000 if you’re in the 24% tax bracket. It’s not life changing, but it does make a difference. 

There are a few important details to remember. The new deduction applies to cash contributions to qualified organizations. You can’t get a tax deduction for giving money to your sister. Gifts to individuals don't count, and you should keep records of your donations. The IRS recommends keeping a record showing the organization, date, and amount of the contribution (most 501(c)(3) organizations provide this kind of documentation automatically).

While we’re on the topic of tax breaks for charitable donations, there's another change worth knowing if you normally itemize your deductions. Beginning in 2026, charitable contributions are subject to a new 0.5% of adjusted gross income floor. In other words, if you itemize, the first 0.5% of your AGI in charitable giving won't be deductible.

That means the best charitable giving strategy may look different from one household to another. The statement, “it depends”, rings true once again. This is where financial planning gets interesting. If you're already giving generously, don't just ask, "How much should I give?" Ask, "How can I give in the most effective way?"

For some people, that might mean giving appreciated investments rather than cash. For retirees, qualified charitable distributions (QCDs) from an IRA may be worth considering. The right strategy depends on your income, age, net worth, tax situation, and of course your charitable goals.

The new 2026 deduction won't revolutionize charitable giving. A $1,000 or $2,000 deduction isn't going to make anyone wealthy. But I like what it represents. Now everyone, regardless of their tax situation, has a genuine tax incentive to be generous.

It’s amazing what great lengths some people will go to “save on taxes”. Whether it’s buying a new truck every year or living in a crammed 2-bedroom house for two years to save on capital gains taxes, some people just can’t stand writing that check in April. If you’re one of the people that wants to make sure you’re taking advantage of every tax break available, don’t forget to be generous.

Money is a tool. You can use it to buy things, save for the future, invest for growth, or give it away. As I said before, that last one is one of the most enjoyable uses of all. If you are already giving, take a few minutes this year to understand the new rules. You might be able to funnel a little more of your money away from the IRS and towards a cause that you care about.

This material is for informational purposes only and does not constitute financial, investment, or tax advice. Please consult your tax advisor or financial planner to discuss your specific circumstances before making any decisions. Securities offered through Cetera Wealth Services LLC, Member FINRA/SIPC. Advisory services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity.

Tyler Kert, a financial advisor and CPA, provides financial planning and tax consulting services at Tamarack Wealth Management in Cashmere, WA. 209 Woodring Street, Cashmere, WA 98815. (509) 300-1040.