Deductions and Credits · Itemized deductions and QBI

Charitable contributions

Verification 2026 Verified
tax year · reviewed 2026-08-19 · Draft for I. Ohu review

Two changes take effect in 2026 and they pull in opposite directions. A floor now applies: charitable contributions are allowed only to the extent they exceed 0.5 percent of the contribution base, so small giving by an itemizer produces nothing. And a deduction for non-itemizers has returned, so small giving by a non-itemizer produces something for the first time since 2021. Meanwhile the documentation rule most often quoted governs a different thing from what people think: cash of any amount needs a bank record, and the well-known threshold triggers a written acknowledgment on top.

The rule

The contribution base is adjusted gross income. Computed without regard to any net operating loss carryback to the year under § 172 (IRC § 170(b)(1)(H)). Every percentage limitation is measured against it.

A floor now applies to individuals. Any charitable contribution otherwise allowable is allowed only to the extent the aggregate of such contributions exceeds 0.5 percent of the contribution base (IRC § 170(b)(1)(I)). The floor is absorbed in a prescribed order — first against contributions under subparagraph (D), then (C), then (B), then (E), then (A), and last against the 60 percent cash category in subparagraph (G). The ordering matters: the floor consumes the least favourably treated categories first, preserving the cash category.

Cash to public charities is limited to 60 percent. Cash contributions to a § 170(b)(1)(A) organization are allowed to the extent the aggregate does not exceed 60 percent of the contribution base, reduced by the contributions already taken into account under subparagraph (A) (IRC § 170(b)(1)(G)(i)). Pub. L. 119-21 § 70425(b)(1) rewrote the clause to remove its 2026 end date, so this is now permanent.

Non-itemizers have a deduction again. Where the individual does not elect to itemize, the deduction is the amount, not exceeding a fixed ceiling, that would be determined if the only contributions taken into account were cash contributions during the year to a § 170(b)(1)(A) organization (IRC § 170(p)) — computed without the § 170(b)(1)(G)(ii) carryover, the new floor, or the § 170(d)(1) carryover. It does not reach a § 509(a)(3) supporting organization (§ 170(p)(1)) or the establishment or maintenance of a donor advised fund (§ 170(p)(2)).

Every monetary gift needs a record. No deduction is allowed for any contribution of cash, a cheque or other monetary gift — of any amount — unless the donor keeps a bank record or a written communication from the donee showing its name, the date and the amount (IRC § 170(f)(17)).

And larger ones need an acknowledgment. No deduction is allowed for a contribution at or above a stated threshold unless substantiated by a contemporaneous written acknowledgment from the donee stating the amount of cash and a description of any non-cash property, whether goods or services were provided in consideration, and a good faith estimate of their value (IRC § 170(f)(8)(A), (B)).

Property has three thresholds, each on the deduction claimed and each in the table below: a documentation requirement at the lowest (IRC § 170(f)(11)(A)(i)), an obligation to obtain a qualified appraisal at the middle one (subparagraph (C)), and an obligation to attach the appraisal to the return at the highest (subparagraph (D)). The appraisal requirements do not apply to cash, inventory, publicly traded securities, or a qualified vehicle with the donee acknowledgment (subparagraph (A)(ii)(I)).

Current figures

Item	2026
Contribution base	adjusted gross income, computed without regard to any net operating loss carryback to the year under IRC § 172^TY2026
The floor	0.5 percent of the contribution base — any otherwise allowable charitable contribution is allowed only to the extent the aggregate exceeds it, and the floor is absorbed against the categories in a prescribed order ending with the 60 percent cash category^TY2026
Cash to public charities	60 percent of the contribution base for cash contributions to a § 170(b)(1)(A) organization, reduced by the contributions already taken into account under that subparagraph — and now permanent, the 2026 end date having been struck^TY2026
Non-itemizers	a deduction of up to $1,000, or $2,000 on a joint return, for cash contributions to a § 170(b)(1)(A) organization — but not to a § 509(a)(3) supporting organization and not to establish or maintain a donor advised fund^TY2026
Records for monetary gifts	no deduction for any cash, check or other monetary gift, of any amount, without a bank record or written communication from the donee showing its name, the date and the amount^TY2026
Written acknowledgment	no deduction for a contribution of $250 or more without a contemporaneous written acknowledgment from the donee stating the amount of cash and a description of any property, whether goods or services were provided in consideration, and a good faith estimate of their value^TY2026
Appraisal thresholds	a deduction of more than $500 for contributed property requires the § 170(f)(11) documentation; more than $5,000 requires a qualified appraisal to be obtained; more than $500,000 requires the appraisal itself to be attached to the return^TY2026
Readily valued property	the appraisal requirements do not apply to cash, inventory, publicly traded securities, or a qualified vehicle for which the donee acknowledgement is provided^TY2026

How it works in practice

For an itemizer, compute the floor before anything else and understand which categories it eats. Section 170(b)(1)(I) absorbs the 0.5 percent against subparagraph (D) contributions first and against the 60 percent cash category last, so a taxpayer whose giving is all cash to public charities loses the first 0.5 percent of their contribution base outright — and a taxpayer with a mix loses it from the categories that were already the most constrained. On a 200,000-dollar contribution base that is 1,000 dollars of giving that produces no deduction at all.

For a non-itemizer, check the three exclusions in § 170(p) before promising anything: it is cash only, it excludes supporting organizations, and it excludes donor advised funds. A client who gives to a community foundation’s donor advised fund gets nothing from this provision.

On documentation, keep the two rules apart. Section 170(f)(17) reaches every monetary gift regardless of size and requires a bank record or donee communication — a cash gift in a collection plate with no record is not deductible at all. Section 170(f)(8) adds a contemporaneous written acknowledgment at its own threshold and above, and “contemporaneous” means by the earlier of the filing date or the due date including extensions. Both must be satisfied for a cheque at that level.

For property, the thresholds are on the deduction claimed, not on the cost or the number of items, and similar items given to one or more donees during the year are aggregated. The appraisal threshold is where most returns go wrong, and the exception for publicly traded securities is the one that saves the most work.

Scenario 1 — the floor that consumed the whole deduction

Bea has a contribution base of 140,000 dollars and gives 600 dollars in cash to her church during 2026. She itemizes because of her mortgage interest and property taxes.

Her floor under IRC § 170(b)(1)(I) is 700 dollars, and her aggregate contributions of 600 dollars do not exceed it. No charitable deduction at all. Before 2026 the whole 600 dollars would have been deductible. Note what she cannot do: § 170(p) is available only to an individual who does not elect to itemize, so she cannot take the non-itemizer deduction instead.

Scenario 2 — the mixed year and the ordering

Caleb has a contribution base of 400,000 dollars. He gives 250,000 dollars of cash to public charities and 8,000 dollars of appreciated stock to a private foundation.

His floor is 2,000 dollars. IRC § 170(b)(1)(I) absorbs it against the least favoured categories first, so it comes out of the private foundation gift under subparagraph (D) before it touches the cash. His stock contribution is reduced to 6,000 dollars for deduction purposes and the cash is untouched — then the cash is tested against the 60 percent limitation in § 170(b)(1)(G). Had he given only cash, the whole 2,000 dollars would have come out of it.

Scenario 3 — the receipt that was not enough

Dara gives 40 dollars in cash to a street collection each month, 480 dollars for the year, and holds a printed receipt for a single 300-dollar gift to a hospital.

The 480 dollars is not deductible, whatever the total: IRC § 170(f)(17) requires a bank record or a written communication from the donee for every monetary gift, and cash into a tin produces neither. The 300-dollar gift needs both a bank record under § 170(f)(17) and a contemporaneous written acknowledgment under § 170(f)(8)(A) — and the acknowledgment must state whether goods or services were provided, which a bare printed receipt often does not. Then the floor is applied to what survives.

The floor bites first and hardest on small cash giving. An itemizer giving less than 0.5 percent of their contribution base now deducts nothing.

The non-itemizer deduction is not an alternative for an itemizer. Section 170(p) applies only where the individual does not elect to itemize.

Cash of any amount needs a record. Section 170(f)(17) has no de minimis exception.

The property thresholds are on the deduction claimed, and similar items are aggregated across donees.

How this has changed

Pub. L. 119-21 rewrote the individual limitations in three places. Section 70425(a)(1) added the 0.5 percent floor at § 170(b)(1)(I) — genuinely new, with no predecessor in the section. Section 70425(b)(1) rewrote § 170(b)(1)(G)(i) to remove its “before January 1, 2026” limitation, making the 60 percent cash limitation permanent. And § 70425(b)(2) adjusted § 170(b)(1)(B) to coordinate with the cash category. Material written before July 2025 describes the 60 percent limit as expiring and describes no floor at all.

The non-itemizer deduction returned in a different form. The temporary provisions for 2020 and 2021 sat in § 62(a)(22) as an above-the-line deduction. The new § 170(p) is structured differently: it caps the § 170 deduction itself for a taxpayer who does not itemize. The cash-only condition survives from the old rule, and the exclusions for supporting organizations and donor advised funds do too.

The floor’s ordering rule is the part most likely to be misapplied. Section 170(b)(1)(I) lists six categories in a fixed sequence, and it runs from the most restricted percentage limitation to the least. A computation that simply subtracts 0.5 percent from the total gives the wrong answer whenever the taxpayer has more than one category of giving.

Substantiation has been stable and is still where deductions are lost. Section 170(f)(17) has required a record for every monetary gift since 2007, and § 170(f)(8)‘s acknowledgment requirement is older still. Neither has an exception for small amounts or for cash given in person, and the courts have consistently denied deductions for failures of form even where the giving plainly happened.

Exam focus

Expect the floor as the new item, either producing a nil deduction on small giving or requiring the ordering rule on a mixed year.

Expect § 170(p) offered to an itemizer. It is not available to one.

Expect a documentation question distinguishing § 170(f)(17) from § 170(f)(8) — a record for everything, an acknowledgment from the stated threshold up.

Expect the appraisal thresholds with a property gift, and check whether the property is publicly traded securities, which are excepted.

Check yourself

1. An itemizer with a contribution base of 180,000 dollars gives 800 dollars of cash to a public charity in 2026. What is the deduction?

Answer: None. IRC § 170(b)(1)(I) allows contributions only to the extent they exceed 0.5 percent of the contribution base — 900 dollars here — and the aggregate falls below it.

2. May that taxpayer instead use the deduction available to non-itemizers?

Answer: No. IRC § 170(p) applies only where the individual does not elect to itemize deductions for the taxable year.

3. A taxpayer drops 20 dollars a week into a collection box, keeping no record. Is any of it deductible?

Answer: No. IRC § 170(f)(17) denies a deduction for any contribution of cash or other monetary gift unless the donor keeps a bank record or a written communication from the donee showing its name, the date and the amount.

4. A donation of 300 dollars is made by cheque and the charity sends a thank-you letter stating the amount but not whether anything was given in return. Is the substantiation sufficient?

Answer: No. IRC § 170(f)(8)(B)(ii) requires the acknowledgment to state whether the donee provided goods or services in consideration, and (B)(iii) requires a good faith estimate of their value where it did.

5. A taxpayer donates artwork with a claimed value of 40,000 dollars. What is required?

Answer: A qualified appraisal must be obtained, under IRC § 170(f)(11)(C), because the claim exceeds that subparagraph’s threshold — but it need not be attached to the return, which subparagraph (D) requires only at a far higher figure. The readily valued property exception in (A)(ii)(I) does not reach artwork.

Change log

2026-08-19Initial draft. Sets out the new IRC § 170(b)(1)(I) 0.5 percent floor added by Pub. L. 119-21 § 70425(a)(1) and its absorption ordering, the § 170(p) deduction for non-itemizers, the § 170(b)(1)(G) cash limitation made permanent by § 70425(b)(1), the § 170(f)(17) recordkeeping rule reaching cash of any amount, the § 170(f)(8) contemporaneous written acknowledgment requirement, and the three § 170(f)(11) appraisal thresholds.