One Big Beautiful Bill (OB3) Charitable Deduction change

Begins tax year 2026, permanent thereafter.

You can now deduct charitable contributions one of two ways.  You can either take the $1KIsingle) / $2K(MFJ) above-the-line deduction if you do not itemize, or you can take the traditional unlimited below-the-line itemized deduction.

The new above-the-line charitable deduction is capped at $1K(single) / $2K(MFJ).  This is for cash contributions only.  Non-cash donations are not deductible as above-the-line. 

The IRS splits charitable contributions into cash and non-cash.  Cash would include physical cash, check, debit or credit card, etc.  Non-cash would include household items, clothing, vehicles, stocks, etc.  This new above-the-line deduction is only for “cash” contributions, per this definition.

If you itemize, then you cannot also take this above-the-line deduction.  You can take one or the other, but not both.  Of course, you can deduct cash and non-cash donations when you itemize.  For itemizers, there is now a deduction threshold of .5% of AGI for this deduction.  This is like the 7.5% threshold for medical expenses. 

For example: You have an AGI of $100K.  This means that the first .5% of $100K, or the first $500 of your charitable donations, is not deductible.  All donations above this $500 amount are deductible.