The 2026 Charitable Deduction Floor: Your First 0.5% of AGI Deducts Nothing.

A surgeon with $900,000 of adjusted gross income (AGI) gives $40,000 a year to her church and a local scholarship fund, and she has deducted every dollar of it for a decade. On the 2026 return she files next spring, the first $4,500 deducts nothing. That is the new charitable deduction floor, effective for 2026, and it travels with a second haircut most of the coverage skips: donors in the 37% bracket now keep 35 cents per dollar of deduction instead of 37. Neither change touches paycheck withholding, so most donors will meet both for the first time when the return comes back worse than last year's.

The mechanics are blunt. Add up everything you gave during the year: cash, appreciated stock, land, all of it. Subtract 0.5% of your contribution base, which for nearly everyone means AGI. Only the remainder is deductible, and it still runs through the same percentage ceilings that have always applied: 60% of AGI for cash to public charities, which OBBBA made permanent in §170(b)(1)(G), 30% for appreciated long-term property, and tighter limits for gifts like the ones I covered on conservation easement deductions. The floor is not a phase-out and it does not care how much you give. Donate $2,000 against $400,000 of AGI and all $2,000 is disallowed, because the floor sits at the bottom, not the top.

The carryover rule is where the floor gets quietly expensive. Under §170(d)(1)(C), the amount the floor eats carries forward only when your gifts also blew past an AGI percentage ceiling that year. A donor giving 3% or 4% of AGI, which describes almost everyone I work with, is nowhere near the 60% ceiling, so the floored slice does not defer to next year. It is simply gone, every year, forever.

The rewritten §68 replaced the old Pease limitation with a flat trim. If your taxable income reaches the 37% bracket, which starts at $640,600 for single filers in 2026, your itemized deductions are reduced by 2/37 of the lesser of the deductions themselves or the income above that line. The fraction is not random: it converts a deduction that used to save 37 cents per dollar into one that saves exactly 35. Two cents per dollar sounds small until you multiply it by a six-figure gift, and unlike the old Pease rule, there is no way to outrun it with more income.

The same law added a permanent deduction for people who take the standard deduction: up to $1,000 of cash gifts, $2,000 on a joint return, under IRC §170(p). It covers cash only, paid directly to an operating public charity. Gifts to donor-advised funds and most private foundations do not count, and neither does property. For a married couple in the 22% bracket the full $2,000 is worth $440 a year. That is not a strategy, but it is free, and unlike the 2020 version, it does not expire.

Bunching got better, not worse. The floor resets every January 1, so a donor who gives $80,000 every other year instead of $40,000 annually clears one $4,500 floor per cycle instead of two. Same generosity, $4,500 more deduction every two years, worth about $1,575 at the capped 35% rate. A donor-advised fund makes the lumpy schedule invisible to the charities. Appreciated long-term stock still deducts at fair market value and still erases the capital gain nobody ever taxed, subject to its 30% of AGI ceiling. And for donors over 70½, a qualified charitable distribution sends IRA money to charity without ever entering AGI, so neither the floor nor §68 ever sees it. If you are also managing the state tax deduction, the phase-down math on the higher SALT cap belongs in the same December conversation.