Above-the-line Charitable Donation
July 17, 2025
Under the newly passed One Big Beautiful Bill Act (OBBBA), deductibility of charitable contributions has been expanded and enhanced for tax years beginning after December 31, 2025.
The table below compares (1) the current law under the TCJA, (2) what the law would have been without the OBBBA and after the TCJA provisions expired, and (3) the new law under the OBBBA.
|
Category |
Current Law (TCJA) |
Post TCJA (No New Law) |
New Law (OBBBA) |
|
Above-the-line charitable donation |
No above-the-line deduction
Charitable contributions are deductible as an itemized deduction. |
Charitable contributions would’ve still been deductible as an itemized deduction. |
Reinstatement of above-the-line deduction for non-itemizers Doesn’t reduce Adjusted Gross Income (AGI) but does reduce taxable income. After 2025 tax year, nonitemizers can deduct up to $1,000 as an above-the-line deduction for certain charitable contributions ($2,000 for married-filing-joint). Implementation of 0.5% floor Itemizing taxpayers after 2025 will have a 0.5% floor added by reducing their charitable contributions by 0.5 % of taxpayers contribution base for the year. |
Here is an example of how the new 0.5 percent floor on itemized charitable donations will work for tax years beginning in 2026:
- Scenario: An individual taxpayer who itemizes deductions has an adjusted gross income (AGI) of $100,000. The taxpayer makes $700 in cash charitable contributions to a qualified organization.
Calculation:
- Adjusted Gross Income (AGI): $100,000
- 0.5% of AGI: 0.005 x $100,000 = $500
- Charitable Contribution: $700
- Deductible Amount: Since the contributions exceed the 0.5% floor, the deductible amount is $700 - $500 = $200
- In this example, the taxpayer can deduct $200 of the $700 charitable contribution, as the first $500 (0.5% of AGI) is not deductible due to the new floor.
Click here to return to Larson & Company's One Big Beautiful Bill Act summaries.
.png)
