$1,000 Charity Donation Deduction in the 2025 Trump Tax Law

Many charities promote that donations are tax-deductible, however most individuals don’t deduct donations on their taxes. That’s as a result of over 80% of taxpayers use the usual deduction, and so they don’t get to deduct donations to charities once they don’t itemize. Folks donate as a result of they help the trigger, whether or not they get a tax deduction or not.

I’m within the 80%. I don’t monitor my donations as a result of I do know I received’t deduct them.

This may change in 2026.

New Deduction for Non-Itemizers

A few of you might recall that Congress allowed non-itemizers to deduct a small quantity of their charitable donations throughout COVID. It was initially a one-off $300 deduction in 2020 (see CARES Act 2020 Charity Donation Deduction: $300 or $600 for Married?). Congress re-created it with some tweaks as one other one-off for 2021 (see 2021 $300 Charity Deduction For Non-Itemizers $600 Married).

The brand new 2025 Trump tax legislation resurrected the 2021 model and raised the allowed quantity from $300 to $1,000 ($2,000 for married submitting collectively). It’ll be ongoing this time, beginning in 2026 (not 2025), with no preset finish date.

All the opposite phrases from 2021 are carried over to this new iteration. This deduction is just for individuals who take the usual deduction. The donations should be in money, not essentially bodily money, however not in home goods, automobiles, or appreciated shares, bonds, mutual funds, ETFs, or cryptocurrencies. Checks, card funds, and financial institution debits are all OK. The donations should be made on to charities, to not a donor-advised fund.

There’s no revenue restrict or phaseout. All different necessities about charity donations nonetheless apply, together with getting a written acknowledgment with all of the required parts.

Some locations reported that this deduction is “above-the-line.” It’s not true. This new deduction doesn’t decrease your AGI. It doesn’t make it simpler so that you can qualify for different tax breaks. It doesn’t have an effect on state taxes.

Decrease Deduction for Itemizers

In the event you itemize deductions, this new $1,000/$2,000 deduction isn’t accessible to you. You’ll proceed to incorporate your charity donations as itemized deductions on Schedule A. Nevertheless, the brand new 2025 Trump tax legislation provides a flooring in your charitable contributions deduction at 0.5% of your AGI, additionally beginning in 2026 (not 2025), with no preset finish date.

This flooring is just like how the medical bills deduction has a flooring at 7.5% of AGI. It reduces the quantity you may deduct by 0.5% of your AGI. For instance, suppose your AGI is $100,000. 0.5% of $100,000 is $500. After this modification goes into impact in 2026, when your whole donations to charities add as much as $4,000, you may deduct solely $3,500 as an itemized deduction.

Accelerating your deliberate donations in future years to 2025 will keep away from having your deduction decreased by 0.5% of AGI annually.

QCD

The brand new 2025 Trump tax legislation didn’t make any adjustments to Certified Charitable Distributions (QCDs).

In the event you’re over 70-1/2, QCDs out of a Conventional IRA proceed to be the easiest way to donate to charities. QCDs depend towards the RMD, however they don’t increase your AGI. You don’t should itemize to make QCDs. Nor are you required to scale back the quantity by 0.5% of AGI. The annual restrict for QCDs is 100 instances increased than this new $1,000/$2,000 deduction for non-itemizers. It’s too unhealthy that solely these 70-1/2 and older can do QCDs.

The one factor is that QCDs can’t go to a donor-advised fund. In the event you ask the IRA custodian to make a fee to the charities, they’ll embody the funds as QCDs within the year-end 1099 kind. Do them early within the 12 months earlier than you are taking another distributions out of the Conventional IRA, together with Roth conversions. Ensure the charities money the checks earlier than December 31.

You may as well write checks out of your IRA and ship them to charities your self, however your IRA custodian received’t know which checks you wrote are QCDs and received’t be capable of point out them as such on the 1099 kind. You’ll should hold monitor of them your self and report what quantity from the overall on the 1099 kind was QCD.

Naturally, as a result of QCDs are excluded out of your revenue to start with, you may’t deduct QCDs once more both towards this new $1,000/$2,000 deduction for non-itemizers or as part of the itemized deductions.