$1,000 Charity Donation Deduction within the 2025 Trump Tax Regulation

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, they usually don’t get to deduct donations to charities once they don’t itemize. Individuals donate as a result of they assist the trigger, whether or not they get a tax deduction or not.

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

It will change in 2026.

New Deduction When You Don’t Itemize

A few of you could recall that Congress allowed individuals who don’t itemize deductions to nonetheless 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 When You Don’t Itemize).

The brand new 2025 Trump tax regulation 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 have to be in money, not essentially bodily money, however not in home goods, automobiles, shares, bonds, mutual funds, ETFs, or crypto. Checks, card funds, and financial institution debits are all OK. The donations have to 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 road.” 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 When You Itemize

If you happen to 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. Nonetheless, the brand new 2025 Trump tax regulation provides a ground to your charitable contributions deduction at 0.5% of your AGI, additionally beginning in 2026 (not 2025), with no preset finish date.

This ground is much like how the medical bills deduction has a ground 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 variation goes into impact in 2026, when your complete 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 diminished by 0.5% of AGI every year.

QCD

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

If you happen to’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 need to 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 occasions increased than this new $1,000/$2,000 deduction for individuals who don’t itemize. 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. If you happen to ask the IRA custodian to make funds to the charities, they’ll present a complete as QCDs on the year-end 1099 kind. Do them early within the 12 months earlier than you’re taking every other distributions out of the Conventional IRA, together with Roth conversions. Be sure the charities money the checks earlier than December 31.

It’s also possible to 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. They received’t be capable to point out them as such on the 1099 kind. You’ll need to hold observe of them your self and report what quantity from the whole distributions 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 whenever you don’t itemize or as part of the itemized deductions.