() New tax rules under the Trump administration look to change how much Americans can deduct from their charitable donations and could end up costing nonprofits millions of dollars.
President Donald Trump’s “big, beautiful bill” now law makes the increased standard deduction permanent, but also adds something new: a universal charitable deduction for non-itemizers.
Starting in 2026, individual taxpayers can deduct up to $1,000 in cash donations and $2,000 if they’re filing jointly as a married couple, even if the couple doesn’t itemize. This marks a big shift from previous rules, which only gave a tax break to the top third of filers.
But in order to fund that new deduction, high-income donors now face limits. If a taxpayer itemizes, the first half-percent of their donations is not deductible. As for Americans in the top tax bracket, their deduction will be capped at 35% instead of 37%.
While the rules are framed as helping average Americans, experts have told the changes could have a costly impact on nonprofits in areas like art, higher education and hospital foundations, as many of these groups have historically relied on big donors.
“I think the tides are going to shift. A lot of these charities are going to focus their energies on mom-and-pop donating small dollars,” said Ted Jenkin, a partner at Exit Wealth. “So yes, and not on big companies, because there are phase-outs for corporations and some of their deductions will be disallowed, and there are phase-outs for wealthy earners.”
The IRS is expected to issue final guidance on these rules by mid-August.
