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August 25, 2025By the Catholic Foundation
Starting in 2026, several tax law changes will impact how individuals and businesses approach charitable giving, especially those who support churches and faith-based organizations. Here's a breakdown of the key updates and strategies to consider.
New Benefits for Charitable Givers
- Above-the-Line Deduction Returns: Taxpayers can once again deduct cash donations without itemizing—up to $1,000 for individuals and $2,000 for married couples.
- Enhanced Deduction for Seniors: Adults aged 65 and older will receive an additional $6,000 deduction ($12,000 for couples), on top of the existing senior bonus. This benefit is available through 2028.
New Limitations to Watch
- Minimum Giving Requirement: Itemizers must donate at least 0.5% of their Adjusted Gross Income (AGI) to qualify for any charitable deduction.
- Reduced Benefit for High Earners: The tax savings for top-income donors will decrease from 37¢ to 35¢ per dollar donated.
- Stricter Corporate Rules: Businesses must now give at least 1% of taxable income to deduct charitable gifts (up to the 10% cap). Smaller donations will no longer be deductible or eligible for carryforward.
What’s Staying the Same
- Tax Rates & Standard Deduction: No changes—current extensions remain in place.
- Cash Gift Deduction Cap: Still deductible up to 60% of AGI.
- Estate & Gift Tax Exemption: Increases to $15 million per individual and $30 million per couple in 2026.
Giving Strategies to Consider for 2025
- Act Now: Accelerate major gifts before the new limits take effect.
- High-Income Donors: May benefit from front-loading donations this year.
Giving Strategies Starting in 2026
- Use the Above-the-Line Deduction if you don’t itemize.
- Blended Giving: Combine cash and appreciated assets for better tax efficiency.
- Qualified Charitable Distributions (QCDs): Still a smart option for those 70½ or older.
- Estate Planning: With a higher exemption, it’s a great time to focus on impactful current giving.
The Catholic Foundation will be presenting a "Donor Education Night" on Monday, September 29, 2025. Learn more.
Before making any decisions, donors are encouraged to consult a financial adviser or tax professional to determine the best strategy for their situation.