What are the limits on cash and noncash charitable contribution deductions for 2025?
Executive summary
Starting in tax year 2026, the One Big Beautiful Bill Act (OBBBA) creates a 0.5% floor on individual itemized charitable deductions (only amounts exceeding 0.5% of AGI are deductible) and a 1% floor for C corporations (donations exceeding 1% of taxable income are deductible); the corporate deduction still cannot exceed 10% of taxable income [1] [2]. For tax year 2025 and earlier rules: traditional percentage ceilings remain (cash gifts to public charities generally deductible up to 60% of AGI; many noncash gifts subject to 20–50% or 30% ceilings depending on asset and recipient), and the law also reinstates above‑the‑line deductions and new small deduction amounts for non‑itemizers beginning 2026 [3] [4] [5].
1. What changes and when: a short timeline
Congress enacted floors in the 2025 reconciliation law (the OBBBA) that take effect for tax years after Dec. 31, 2025. That means taxpayers filing for 2026 and later will face a 0.5% floor on itemized individual charitable deductions and corporations will face a 1% floor on deductible contributions [1] [2]. Multiple analysts and nonprofits treat 2025 as a last year to use the prior, more favorable timing and ceiling rules for planning [5] [6].
2. The individual floor: who it affects and how
Under the new floor, an individual who itemizes can deduct only the portion of charitable giving that exceeds 0.5% of their adjusted gross income (AGI). For example, a taxpayer with $100,000 AGI must give more than $500 in a year before any gift is deductible; only the excess would count toward existing AGI percentage limits [1] [6]. Analysts note this will mainly reduce the tax value of small, scattered gifts and change timing decisions for donors who previously itemized [7] [8].
3. Corporate floor and existing corporate limits
For C corporations, the law disallows deductions for the first 1% of taxable income; deductible corporate charitable contributions must exceed that 1% floor and continue to be subject to the existing cap of 10% of taxable income [1] [2]. Advisers flagged that corporations may restructure gifting or use multi‑year commitments to ensure gifts exceed the 1% deductible threshold [9].
4. What stays the same in ceilings and carryovers
Traditional percentage ceilings for different types of gifts remain in current guidance: cash gifts to public charities are largely subject to the 60% of AGI ceiling (other assets and recipients may be limited to 30%, 20%, or different percentages under longstanding IRC rules) and donors can still carry forward excess contributions within the preexisting carryover rules [3] [10]. Professional summaries reiterate that the 60% cash limit from TCJA was made permanent under the 2025 law [11].
5. New benefits for non‑itemizers and small donors
Starting in 2026 the OBBBA creates an above‑the‑line charitable deduction for taxpayers who take the standard deduction: amounts up to $1,000 for single filers and $2,000 for joint filers are deductible even without itemizing [2] [12]. Several analyses note this provision makes 2026 more attractive for smaller donors who do not now itemize [5] [12].
6. Planning implications and practical tactics
Tax advisers and charities uniformly recommend donors consider accelerating or “bunching” gifts into 2025 if they expect to itemize or give large amounts, because 2025 still operates under the pre‑floor rules and higher marginal tax benefits for some filers [5] [6] [11]. Donor‑advised funds (DAFs) are frequently cited as a tool to take an immediate deduction under current rules while distributing grants over time [7] [13].
7. Tradeoffs, distributional effects, and open questions
Analysts say the combination of a modest floor and an above‑the‑line small deduction will redistribute tax incentives: it reduces the tax value of small itemized deductions but expands benefits to non‑itemizers. The Tax Foundation estimated the above‑the‑line deduction reduces revenue roughly $74 billion through 2034 while the individual floor raises about $63 billion, producing a near wash in budgetary terms [5]. Public‑interest and nonprofit groups warn the floor could chill small donations and complicate fundraising; industry sources encourage year‑end acceleration of large gifts [7] [6].
Limitations and sourcing: this summary relies on reporting and analyses assembled after enactment of the OBBBA and on IRS guidance summaries; available sources do not mention every nuance (for example, detailed IRS forms guidance or administrative clarifications for 2026 implementation are not in the provided material) [1] [3].