The One Big Beautiful Bill Act (OBBBA) is shaking things up for charitable giving — and small business owners, realtors, and contractors need to pay attention. While there’s some good news, many of the new rules limit how much you can deduct. Let’s look at what’s changing and how you can make the most of it before these updates take full effect.
A New Deduction for Non-Itemizers
Starting in 2026, taxpayers who don’t itemize their deductions will finally get a small tax break for giving to charity.
- Single filers can deduct up to $1,000 in cash contributions.
- Married couples filing jointly can deduct up to $2,000.
This isn’t an above-the-line deduction (so it won’t reduce your Adjusted Gross Income), but it will reduce your taxable income — which still lowers your tax bill.
If you’re a small business owner used to taking the standard deduction, this new rule might let you capture tax savings from charitable giving for the first time.
Temporary Boost to State and Local Tax (SALT) Deductions
The OBBBA temporarily raises the SALT deduction cap from $10,000 to $40,000, starting in 2025 and running through 2029. This higher cap means more taxpayers may once again itemize their deductions — especially those in high-tax states. For some, that opens the door to larger charitable deductions as part of a more strategic year-end tax plan.
A New Floor for Charitable Deductions
Here’s where the bad news starts. Beginning in 2026, itemizers can deduct charitable donations only to the extent they exceed 0.5 percent of adjusted gross income (AGI).
Example: If your AGI is $200,000 and you donate $10,000, only $9,000 will be deductible — the first $1,000 is lost to the new 0.5 percent floor.
It’s the first time we’ve ever seen a floor applied to charitable deductions, and it could discourage higher-income donors. However, it also means that planning your giving strategically — perhaps by bunching multiple years of contributions together — could help ensure you exceed the new floor.
What About Corporate Charitable Deductions?
If you run your business as a C corporation, your charitable deductions are changing too.
Until now, C corporations could deduct up to 10 percent of taxable income for charitable giving. Starting in 2026, they’ll also face a 1 percent floor — meaning contributions are deductible only to the extent they exceed 1 percent of taxable income.
Example: If your corporation earns $1 million in taxable income, the first $10,000 of donations won’t be deductible. Only contributions above that amount qualify.
That means corporations giving less than 1 percent may get no tax benefit at all — unless they increase donations or bunch them in certain years to clear the new threshold.
The Winners and Losers
Winners:
- Non-itemizers finally get a small charitable deduction.
- Taxpayers in high-tax states benefit temporarily from the bigger SALT deduction.
- Taxpayers over 70½ still have the best option — making qualified charitable distributions (QCDs) directly from their IRAs, which aren’t subject to the new floor.
Losers:
- Itemizers face the new 0.5 percent floor.
- C corporations face both a 1 percent floor and a 10 percent ceiling.
- High-income earners lose a bit of value in their deductions, capped at 35 cents per dollar instead of 37 cents.
Planning Ahead: How to Maximize Your Charitable Deductions
If you want your generosity to deliver tax savings, timing matters:
- Give more before 2026. You can double up on donations in 2025 to beat the new floors.
- Bunch contributions. If you can’t give every year, consider donating larger amounts every few years to surpass the thresholds.
- Work with a tax expert. Small business owners and realtors with fluctuating income can plan giving strategies that align with their best tax years.
Bottom Line
The OBBBA changes how charitable deductions work — and for small business owners, that means being strategic with your giving.
Ken-Mar Tax helps business owners, contractors, and realtors make smart tax decisions that reduce what they owe and keep them compliant. If you want to maximize your charitable deductions and plan ahead for 2026, contact Ken-Mar Tax today to start building a giving strategy that saves you money.
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