Which organizations qualify as eligible charities for the 2025 above-the-line deduction?
Executive summary
The new above‑the‑line charitable deduction created by the 2025 tax package is narrowly targeted: it covers cash gifts made directly to U.S. publicly supported 501(c) charities and explicitly excludes donor‑advised funds, private non‑operating foundations, supporting organizations and other nonqualifying recipients [1] [2] [3]. Many advisers treat the rule as effective for tax years beginning after 2025 (so practically for 2026 returns), but the qualifying‑organization rules in the reporting are consistent across multiple practitioners and nonprofits [4] [5].
1. What counts: “qualified public charities” and cash only
The consensus across tax firms and charity analysts is clear: to be eligible for the new above‑the‑line deduction the recipient generally must be a U.S. publicly supported 501(c) charity — think churches, hospitals, public colleges, community food banks — and the contribution must be made in cash (not securities, property or in‑kind) directly to that charity [6] [7] [3]. Several advisory pieces emphasize that the deduction is limited to cash donations and that non‑cash gifts aren’t eligible for this specific above‑the‑line break [7] [8].
2. Who is explicitly excluded
Reporting from law and accounting firms repeatedly flags exclusions: contributions to donor‑advised funds (DAFs), private non‑operating foundations, and supporting organizations do not qualify for the above‑the‑line deduction [1] [2] [3]. Guides also note that gifts to individuals, political organizations, and foreign charities generally don’t qualify under the Internal Revenue rules that inform the new deduction [6] [4].
3. Why the law draws those lines — and the implicit policy tradeoffs
Sources explain the exclusions are intentional: lawmakers wanted to encourage direct giving to operating public charities rather than routing first through intermediaries or private vehicles where immediate public benefit is less transparent, and to limit tax sheltering via DAFs and private foundations [4] [2]. That design narrows the base of eligible recipients, helping control revenue cost while widening access for standard‑deduction filers; critics warn it may reduce flexibility for donors who use DAFs to time grants [4] [5].
4. Practical consequences for donors and nonprofits
Practitioners advise that donors who want the deduction should give cash directly to qualifying public charities and retain documentation; those who prefer donor‑advised funds can still donate to DAFs but should not expect the above‑the‑line benefit for those contributions [6] [2]. Nonprofits that are public charities can benefit from increased small cash gifts from non‑itemizers, while organizations outside the qualifying list—private foundations, donor‑advised funds, supporting organizations—should plan for unchanged deductibility dynamics [4] [1].
5. Limits of the reporting and lingering questions
The sources agree on the core eligibility rules but differ on implementation timing language (many frame the change as affecting tax years beginning after 2025, i.e., effective for 2026 returns) and on some floor and AGI interactions that complicate who actually benefits most [5] [9] [8]. The available reporting does not provide an exhaustive IRS list of qualifying organizations or sample determinations for borderline entities (e.g., certain community foundations or international affiliates), so confirmation with IRS status checks or professional tax counsel is necessary for ambiguous cases [6] [3].
6. Bottom line
For purposes of claiming the new above‑the‑line deduction as described in the reporting, eligible charities are U.S. publicly supported 501(c) organizations that receive cash gifts directly — donations to DAFs, private non‑operating foundations, supporting organizations, political groups, foreign charities or individuals do not qualify — and donors should verify IRS charity status and preserve receipts to substantiate the deduction [7] [1] [6].