President Trump’s ‘Big and Beautiful Bill’ Changes Charitable Tax Deduction in 2026

As the end of the year approaches, it’s easy to overlook how last-minute income increases can have an unexpected impact on your taxes.

Changes in President Donald Trump’s “Big and Beautiful Bill” could see some taxpayers’ charitable deductions shrink as their incomes rise starting in 2026.

Increased income can come from selling assets, converting a pre-tax individual retirement account to a Roth IRA, or earning a bonus, for example. Taxpayers will see their charity tax deduction reduced when they file their 2027 tax returns.

Ed Justrem, a certified financial planner and senior planning specialist at Savant Wealth Management in Westwood, Mass., says legal changes are making tax and income planning “increasingly complex” for clients.

Here are some important things to know about charitable deductions in 2026.

President Trump’s “Big and Beautiful Bill” (a multi-trillion dollar tax and spending package) signed into law in July 2025 included changes to the charitable deduction for taxpayers across income groups.

When filing taxes, taxpayers claim the greater of the standard deduction ($16,100 for single filers in 2026 and $32,200 for married couples filing jointly) or itemized tax deductions, including the charitable deduction.

But starting in 2026, there will also be a charitable tax break for filers who don’t itemize, worth up to $1,000 for single filers and $2,000 for married couples. This deduction applies to cash donations to qualified tax-exempt organizations.

Here’s a basic picture of the value of tax breaks: For someone in the 22% tax bracket, a $1,000 deduction could reduce your taxes by $220.

“This is actually a great thing for a lot of people” who previously didn’t get the tax benefits of making small donations to charity, Justrem said.

But Trump’s bill also makes two changes to itemize tax deductions for households, and experts say these adjustments could reduce charitable deductions for certain taxpayers.

In 2026, a charitable deduction “floor” will be established for taxpayers who itemize their tax deductions, allowing them to reduce their taxes only if they exceed 0.5% of their adjusted gross income (AGI). Prior to the 2025 tax law, there was no floor.

For example, if your AGI is $400,000 and you donate $10,000 in 2026, the lower 0.5%, or first $2,000, is not eligible for a charitable deduction. In this example, if the charitable gift is less than the $2,000 minimum, there is no deduction.

So increasing your income by converting to a Roth, selling a profitable investment or receiving a bonus can have a surprising impact on your tax savings, Justrem said.

“The floor is higher, so if you don’t adjust your giving plan, you could lose more and more of your deductions,” he says.

Using the same example, if your AGI increases to $500,000 and you contribute the same $10,000, the 0.5% floor increases to $2,500 in 2026.

President Trump’s bill also caps charitable deductions for filers in the top income tax brackets, a change that goes into effect this year.

Households in the highest federal income bracket pay the highest marginal income tax rate of 37%. However, the law effectively caps the charitable deduction for these taxpayers at 35%;

“You’re limited to saving 35% of each deductible dollar, which reduces tax benefits for people in the top 37% tax bracket,” said Josh Norris, CFP and founder of LeFleur Financial in Jackson, Mississippi.

Norris, who is also a certified public accountant, said this change, combined with the 0.5% deduction floor, “makes multi-year planning even more important for clients,” including the timing of charitable donations.

Despite recent changes to charitable deductions, “there’s still a lot we can do if you’re proactive,” said Savant Wealth Management’s Justrem. “There is definitely plenty of time to plan (in 2026).”

For example, some financial advisors still recommend using so-called donor-advised funds.

These funds function like a charity checkbook, allowing taxpayers to donate large amounts at once, but gradually distributing their contributions over time. Typically, these accounts employ a “bundling” strategy that consolidates multiple years’ worth of contributions into one year with an upfront charitable deduction that goes into the donor’s recommended fund.

After the transfer, the taxpayer can invest and potentially grow the funds for future donations to the public charity of their choice.

LeFleur Financial’s Norris said taxpayers should also consider “tax lot selection,” which selects a specific group of assets based on their tax impact, when deciding which investments to donate.

For example, experts say it’s usually better to contribute profitable investments from a brokerage account than to contribute cash from various accounts. By doing so, investors can avoid capital gains taxes.

But investors should try to take advantage of profitable investments held for more than a year, known as “long-term capital gains assets,” Justrem said. Compared to charitable donations, these offer greater tax relief than investments held for less than a year, known as short-term capital gain assets, he said.

For long-term capital gain assets, you can generally deduct the current fair market value of your investment. By comparison, short-term capital gain assets are typically limited to their original purchase price, or cost basis.