CoffeyWritesImpact

While many of the new laws passed this year have hampered charitable efforts, a surprise change in the IRS tax code will allow people to take the typical standard deduction and have the ability to claim itemized charity deductions on top of it. Starting this year, for a household that is married and jointly filing their tax return, the standard deduction will be approximately $31,500.¹ Basically, a standard deduction means that rather than itemizing every expense that could reduce a person’s amount of taxable income, they take the government-assigned average for their situation.² Basically, this practice saves a lot of work for everyone, as rather than itemizing every expense that could reduce taxable income, up to nine in ten people use this strategy.³

What Actually Changed?

When working with taxes, calculations are based on AGI (adjusted gross income), which is essentially your gross income minus contributions to health or retirement accounts, student loan interest, education expenses, some business expenses, some of the self-employment tax, and alimony payments.⁴ Obviously, if you are an ultra-wealthy donor who gives more than $31,500 to charity per year, it is more advantageous to itemize your charity receipts so you can deduct more from your AGI. However, for the non-ultra-wealthy, most people choose to take the standard deduction. That is where this new provision comes in. Starting in 2026, the new tax break will allow married couples to itemize an additional $2,000 in charitable deductions on top of the standard deduction.⁵

If you choose to itemize everything, however, there have been some more complicated changes. For example, the first 0.5% of your AGI is no longer deductible, and the benefits of the top tax bracket of 37% will be slightly reduced and capped at 35%.⁸ These provisions are mostly for ultra-wealthy donors; unfortunately, though, they will almost certainly lower donation amounts. Basically, because the rich will be forced to pay more in taxes, they will be less incentivized to donate.

However, the focus of this article is on the nine in ten Americans who do not itemize, meaning this new deduction process could potentially affect a vast majority of the country.

Moving more into the everyday American experience, each year collections of local councils, such as the National Council of Nonprofits, organize lobby days in Washington that support nonprofit and government collaboration.⁶ This past year, the lobby day occurred before the Senate’s draft of the One Big Beautiful Bill, which included the $2,000 additional deduction for the first time.⁷ This collective lobbying effort, which was based on policy rather than solicitation of causes, is a strong example of how community action can influence policy to expand opportunities for social impact.

The Results

The biggest question is as follows: do experts believe this change will actually increase charitable giving? Will people go through the extra effort to take $2,000 off their taxable income? And, to clarify, these are not tax credits, which directly lower the amount of taxes you owe. Rather, these are tax deductions, which lower taxable income and generally have a smaller impact than credits. Still, these are wins for incentivizing charity.

Overall, to give a complete answer, the answer is yes. While ultra-wealthy donors may see reduced tax benefits for charitable giving, everyday Americans who take the standard deduction are projected to give more.⁹ This change must be leveraged by nonprofits, as the sector should target low- and mid-sized donors who can benefit from these new laws. Here are some tangible ways nonprofits can attract new donors based on this policy shift:

• Hold educational workshops explaining the new tax laws and incentives in local community spaces.
• Produce online materials explaining how a donation affects a person’s AGI and tax benefits.
• Focus on financial literacy rather than persuasion of donation; oftentimes, genuine teaching is a great way to engage a donor.
• Create databases of new prospective donors, focusing on average Americans rather than ultra-wealthy individuals.
• Do not shy away from explaining the tax break! Many people donate for financial reasons, and ignoring that portion of the market would be a missed opportunity.

Hopefully, these new laws and tax breaks encourage and enable everyday people to give to charity while receiving a financial benefit. While $2,000 per married couple per year may not seem significant in the short run, it can certainly add up.

References

1. Parys, S. (2025, October 16). Standard deduction 2025–2026: Amounts, how it works. NerdWallet. https://www.nerdwallet.com/taxes/learn/standard-deducti

2. Internal Revenue Service. (2025). Deductions for individuals: What they mean and the difference between standard and itemized deductions. https://www.irs.gov/newsroom/deductions-for-individuals-what-they-mean-and-the-difference-between-standard-and-itemized-deductions

3. VanSomeren, L. (2025, March 12). Why 9 in 10 people take the standard tax deduction. SoFi. https://www.sofi.com/article/money-life/why-9-in-10-people-take-the-standard-tax-deduction/

4. Fidelity Investments. (2025, February 12). Adjusted gross income (AGI): What it is and how it works. https://www.fidelity.com/learning-center/personal-finance/agi-adjusted-gross-income

5. Childress, R. (2026, January 13). Will the new $2,000 tax break bring back everyday donors? The Chronicle of Philanthropy. https://www.philanthropy.com/news/will-the-new-2-000-tax-break-bring-back-everyday-donors/

6. National Council of Nonprofits. (2025, June 30). The impact of nonprofit lobby days. https://www.councilofnonprofits.org/articles/impacts-lobby-days

7. National Council of Nonprofits. (2025, June 30). The impact of nonprofit lobby days. https://www.councilofnonprofits.org/articles/impacts-lobby-days

8. Lund, C., CAP®, & Adams, H., CPA, CFP®. (2025). Tax law changes affecting charitable giving. DAFgiving360™; Schwab Center for Financial Research. https://www.dafgiving360.org/tax-law-changes

9. Kraschel, E., & York, E. (2025). Charitable deduction changes in the One Big Beautiful Bill. Tax Foundation. https://taxfoundation.org/blog/charitable-deduction-big-beautiful-bill/