- - Tax law changes may make most Americans hold off on cash donations

Medora Lee, USA TODAYDecember 23, 2025 at 5:03 AM

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If you're concerned about taxes, you probably want to skip that year-end cash donation.

Tax laws are changing, and timing is everything this year to maximize your gifts.

Thanks to President Donald Trump’s tax and spending package, charitable tax deductions are about to see the biggest changes in nearly a decade in 2026. The new rules affect itemizers and non-itemizers alike, but differently. Depending on which you are, financial experts have different advice for how to handle charitable contributions this year and next.

Itemizers should hit fast-forward and give their gifts this year, but people who don't itemize − a hefty 9 out of 10 Americans − may want to pause until 2026 to maximize deductions, experts said.

“This is important and ends up being something a lot of clients want to talk about, even if they came to talk about something else,” said Jane Ditelberg, senior vice president and director of tax planning for The Northern Trust Institute. “There’s very specific advice around this compared to other things" in the tax law.

What’s changing for itemizers who make charitable donations?

Two major changes for those who itemize deductions start in 2026. They are:

A 0.5% adjusted gross income (AGI) floor. Only charitable contributions that exceed 0.5% of a taxpayer's AGI are deductible. This applies to all taxpayers, not just the wealthiest. For instance, if your AGI is $200,000, the first $1,000 in donations is not tax-deductible.

A 35% cap on deduction value: For only those in the top 37% tax bracket, the tax benefit from all itemized deductions (not just charitable contributions) for taxpayers will be capped at a 35% tax rate. This means a top earner who donates $10,000 will receive a $3,500 tax reduction instead of the $3,700 they would have received under the current rate.

David Brown, 16, plays a Christmas tune on his tuba while Sherry Moore, left, of Old Hickory, walks away after putting money in the Salvation Army’s red kettle on Dec. 24, 1986. Brown, a student at McGavock High School, has been collecting donations since the day after Thanksgiving.What’s changing for non-itemizers who give?

Those who take the standard deduction instead of itemizing – about 90% of filers, according to IRS data − can claim a charitable contribution deduction beginning next year.

Above-the line deduction: Non-itemizers will be able to claim a deduction for cash donations of up to $1,000 for single filers and $2,000 for couples filing jointly.

Only cash donations are counted for the deductions, and the amounts aren’t annually adjusted for inflation.

The new deduction is like the temporary $300 deduction for single and $600 for joint non-itemizing filers during the COVID-19 pandemic in 2020 and 2021 that helped boost donations among small donors. IRS Statistics of Income data showed more than 42 million additional taxpayers claimed the deduction, resulting in an almost $11 billion boost to charities in 2020. The Fundraising Effectiveness Project said gifts under $250 grew by 15.3% in 2020 compared with 2019, and $300 gifts, the exact amount allowed for a deduction, jumped 28%.

How should taxpayers time gifts to maximize deductions?

Itemizers can avoid the new floor in 2026 by giving more this season, experts said. Donors who give this year would receive a tax deduction for their entire charitable contribution instead of just the portion above 0.5% of AGI.

High-net-worth givers may also consider bunching, or combining two or more years of donations, in 2025 to avoid the haircut on the cap to 35% from 37% on all itemized deductions they claim, experts said.

To illustrate how much taxpayers can save, let's say a high-income individual filer with $1 million AGI donates $20,000:

In 2026: Because of the 0.5% of AGI floor, $5,000 would not be deductible. The remaining donation of $15,000 would receive only a 35% tax benefit, or $5,250.

In 2025: The full $20,000 donation would receive the 37% tax benefit rate, or $7,400.

Non-itemizers should consider doing the opposite and wait until 2026 to donate their cash to get a deduction, experts said. Donations in 2025 don’t receive any deduction.

How can itemizers accelerate donations in 2025?

Other than writing one giant check, experts said itemizers might consider:

Donor advised fund (DAF): Givers can contribute any amount to a DAF, take an immediate tax deduction for it and use the DAF money for donations over time. The money can also be invested to grow. “This is a good option for people who don’t want to hand over four times the amount to an organization now,” said Claudia Gonzalez, principal in Kaufman Rossin's Tax Services Advisory Group. “They can pay it out over three to seven years.”

Foundation: A private foundation would have to be established and disburse a certain amount of money each year. This is an option for people who want total control over their donations, but they usually cost more to establish and run.

Clean house: Cash isn’t the only charitable contribution that’s deductible. So are property and goods. “Yes, clean out the house and donate everything you’ve wanted to get rid of,” Gonzalez said. “It’s not just from a tax and economic point of view, but it’s also cathartic to do so. If you have a college student or older family member, too. It can be cleansing.”

Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.

This article originally appeared on USA TODAY: Why tax law changes may turn most Americans into Grinch this season

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