Charitable giving has long been an important part of many Minnesotans’ financial and estate planning strategies. However, new federal tax rules taking effect in 2026 will change how charitable contributions are deducted—and may affect how donors structure their gifts.
While these changes do not eliminate the tax benefits of philanthropy, they do alter the timing and value of certain deductions. Understanding these updates now can help individuals, families, and business owners make informed planning decisions.
Below are several key changes to charitable giving tax rules beginning in 2026.
1. A New Minimum Threshold for Itemized Charitable Deductions
Beginning in 2026, taxpayers who itemize deductions will only be able to deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI).
This means the first portion of charitable donations may no longer produce a tax benefit.
For example:
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If a taxpayer has $200,000 of AGI, the first $1,000 of charitable contributions will not be deductible.
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Only donations exceeding that amount may qualify for a deduction, subject to existing limits.
For individuals who typically make smaller annual contributions, this change may reduce the immediate tax advantage of charitable giving.
2. A Cap on Deduction Value for High-Income Taxpayers
Another change will affect individuals in the highest federal tax bracket.
Beginning in 2026, the tax benefit of itemized deductions—including charitable contributions—will be capped at 35%, even for taxpayers in the 37% marginal tax bracket.
In practical terms, this means high-income donors may receive slightly less tax benefit for charitable gifts than under current law.
3. A New Deduction for Taxpayers Who Do Not Itemize
Historically, taxpayers taking the standard deduction received no federal tax benefit for charitable contributions.
Starting in 2026, that changes.
Taxpayers who claim the standard deduction will be able to deduct:
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Up to $1,000 for single filers
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Up to $2,000 for married couples filing jointly
This deduction is considered “above the line,” meaning it reduces income before adjusted gross income is calculated.
However, there are some limitations:
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Only cash contributions qualify
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Gifts to donor-advised funds do not qualify
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Non-cash donations (such as property or stock) are excluded
4. Continued Benefits for Larger Cash Gifts
The tax rules continue to allow taxpayers who itemize to deduct cash gifts to public charities up to 60% of their AGI.
This rule provides flexibility for donors making significant charitable contributions, particularly as part of estate planning, wealth transfer strategies, or end-of-year tax planning.
5. Changes Affecting Businesses and Corporate Giving
The new framework will also impact corporate donors.
Beginning in 2026, corporations may deduct charitable contributions only to the extent the contributions exceed 1% of taxable income, while the existing 10% maximum deduction limit remains in place.
This may affect companies that make smaller or consistent charitable gifts each year.
Planning Opportunities
Although some of the new rules reduce the immediate tax benefit of certain charitable donations, thoughtful planning can still maximize both philanthropic impact and tax efficiency.
Strategies that may be worth discussing with your advisors include:
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Bunching charitable contributions into a single tax year to exceed deduction thresholds
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Making qualified charitable distributions (QCDs) from retirement accounts
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Donating appreciated assets rather than cash
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Coordinating charitable giving with estate planning goals
Each approach should be evaluated based on an individual’s tax situation, income levels, and charitable objectives.
The Importance of Coordinated Planning
Changes in tax law often create both new opportunities and new complexities. For individuals who regularly give to charity—or who are considering larger philanthropic gifts—this may be a good time to review their overall tax and estate planning strategy.
Working with experienced legal and financial advisors can help ensure that charitable giving continues to align with both personal values and long-term financial goals.
If you have questions about how these tax changes may affect your estate plan, charitable giving strategy, or tax planning, contact us today. We are happy to help you evaluate your options.
