For the first time since 2021, a donor who takes the standard deduction (roughly nine in 10 U.S. taxpayers) can deduct charitable gifts. The change took effect January 1 under last summer's federal tax law, and unlike the pandemic-era version, it is permanent. Chances are your appeal copy, gift receipts, and donor FAQs haven't caught up yet, and mid-July is the right moment to fix that, before year-end campaign pieces go to print.
What Changed on January 1
Four provisions of the One Big Beautiful Bill Act matter for fundraisers, as of July 2026:
- Non-itemizers can deduct cash gifts up to $1,000 a year (single filers) or $2,000 (married filing jointly), taken on top of the standard deduction. Cash only: no appreciated stock, no property. Gifts to donor-advised funds and most private foundations don't qualify, and neither do gifts to supporting organizations.
- Itemizers face a new floor. Only contributions above 0.5% of adjusted gross income are deductible. A donor with $400,000 of AGI who gives $20,000 loses the first $2,000 of the deduction.
- Top-bracket donors get a smaller benefit. For donors in the 37% bracket, the deduction is now worth at most 35 cents per dollar given rather than 37, part of a cap that applies to their itemized deductions generally.
- Corporations have their own floor. A company can deduct charitable contributions only above 1% of taxable income, up to the existing 10% ceiling.
One familiar rule survived intact: the 60%-of-AGI limit for cash gifts to public charities is now permanent.
How Much New Giving Could This Unlock?
About $4.4 billion a year, by the best available estimate, though the law as a whole takes more than it gives. Researchers at Indiana University's Lilly Family School of Philanthropy, in a study with CCS Fundraising, project the non-itemizer deduction will add roughly $4.39 billion in annual household giving and draw roughly 8 million new giving households. The other provisions cut the other way: the same study projects the 35% cap will reduce giving by $6.1 billion a year, the 0.5% floor by $2.43 billion, and the corporate floor by $1.55 billion, for a net decline of about $5.69 billion, roughly 1% of U.S. giving. These are long-run annual estimates, not a 2026 forecast, and researchers caution that donors take time to adjust.
Precedent says small deductions get used. When Congress allowed a $300 deduction ($600 for couples) in 2021, more than 47 million households claimed it, reporting about $18 billion in gifts, according to IRS data compiled by the National Council of Nonprofits. More than a fifth of those dollars came from households earning under $30,000, which is to say: this is a small-donor incentive, and small donors used it.
Put One Plain Sentence in Every Appeal
You are not your donors' tax adviser, and your copy shouldn't pretend to be. But a factual sentence is fair game, and it is an easy one to add. Something like: "New for 2026: even if you don't itemize, your cash gifts up to $1,000 ($2,000 for couples) may be tax-deductible. Check with your tax adviser." Put it in the year-end letter, the donation page, and the email footer, then leave it alone.
Two supporting moves cost nothing. First, tighten receipts: the deduction still requires documentation, so prompt written acknowledgments (which donors already need for gifts of $250 or more) are now worth real money to more of your donors. Second, brief whoever answers the phone, because "is my gift deductible now?" is a question frontline staff will hear this December, and the honest answer for most donors changed this year. The donors most likely to act on the new deduction are the loyal, modest givers you already have, which makes retention work pay twice.
The Quiet Changes for Major and Corporate Gifts
The 0.5% floor changes timing math for itemizers: a donor who gives steadily every year now loses a slice of the deduction annually, while concentrating two years of giving into one (the bunching strategy advisers already recommend) clears the floor once instead of twice. For top-bracket donors, the after-tax cost of a large gift rose modestly; that is a conversation worth having proactively, not a reason to panic. And the 1% corporate floor gives smaller corporate donors a reason to consolidate giving into fewer, larger commitments or into high-income years, one more force behind the reshuffling already underway in corporate philanthropy.
The takeaway
A permanent giving incentive for nine in 10 taxpayers is the biggest fundraising-relevant tax change in years, and your donors mostly haven't heard about it. Add one plain sentence to every year-end piece, tighten acknowledgment discipline, and brief your major-gift officers on the floor and the cap. Budget conservatively all the same: the same law that created the new deduction is projected to reduce total giving on net.