Published October 22, 2026
Introduction
With extension season behind them, CPA firms have time to revisit client decisions that still affect the current tax year. Charitable giving deserves a place on that list because the federal deduction rules changed for 2026.
Eligible nonitemizers now have a limited deduction for qualifying cash gifts, while itemizers face a new income-based floor. The result is that two clients making similar donations may need different advice.
For firms, the practical starting point is a short review of how each client expects to file, what they have already donated, and what they plan to give before year-end. This article focuses on individual federal income tax planning for 2026 returns filed in 2027.
Nonitemizers have a new reason to keep donation records
This creates a useful conversation with clients who previously assumed their charitable records would have no effect on their federal return because they took the standard deduction.
The rules are narrower than a general deduction for everything donated. IRS guidance excludes noncash gifts, contributions to donor-advised funds and supporting organizations, and prior-year carryovers from this nonitemizer deduction.
A donation of clothing or stock therefore does not qualify for this particular provision. Neither does every cash contribution simply because the recipient describes its work as charitable.
Ask clients for qualifying gifts already made as well as planned contributions. Explain that the limit is a deduction from taxable income, not a dollar-for-dollar tax credit or a guaranteed refund.
Itemizers need to account for the new 0.5% floor
For clients who itemize, IRS Publication 505 explains that the 2026 charitable deduction is limited to otherwise allowable contributions above 0.5% of adjusted gross income.
Consider a simplified example: a client has $200,000 of AGI and makes $5,000 of otherwise deductible charitable contributions. The floor is $1,000, leaving $4,000 after applying that floor, before other applicable limitations.
Apply the floor to the annual total, rather than separately to each gift. Use projected 2026 income, not the AGI on the 2025 return just completed.
Additional percentage limits, carryover provisions, and the overall itemized-deduction limitation for higher-income taxpayers may also affect the result. The example isolates the new floor; it is not a complete tax calculation.
Start with a current projection and the client's giving goals
A useful planning conversation begins with what the client wants to support and what they can comfortably give. Then evaluate the tax treatment within that plan.
Request an updated income estimate and a list of other expected deductions. Confirm whether the client is likely to itemize after accounting for the rules applicable to their situation.
For clients considering larger gifts, compare realistic alternatives. What happens if they complete the planned contribution this year? Would a different timing pattern fit their charitable commitments and cash needs? Would a change in income alter the projection?
Document the assumptions behind each comparison. A year-end bonus, business distribution, or investment sale can make an earlier estimate less useful.
Avoid presenting a larger deduction as sufficient reason to give more. The client still parts with the donated money or property, and the tax benefit is only one part of the decision.
Verify the recipient and the type of gift
Ask for the organization's legal name and identifying information before relying on a deduction in the projection. The IRS recommends using its Tax Exempt Organization Search to check whether an organization is eligible to receive deductible contributions.
Recipient eligibility and gift eligibility are separate checks. A contribution can involve a legitimate charitable organization while still falling outside the new nonitemizer provision.
For planned gifts of securities or other property, identify the asset, ownership history, available records, and intended recipient early. Determine which valuation and substantiation requirements apply before the client proceeds.
Coordinate with the receiving organization and any custodian involved. Ask about processing requirements and document completion instead of assuming that submitting a request in December completes the gift.
Gather the support while clients can still obtain it
Create one donation schedule showing the recipient, date, amount or property description, gift method, and supporting documents received. Include whether the client received anything in return, such as event tickets or other benefits.
For monetary gifts, IRS recordkeeping guidance calls for a bank record or written communication showing the charity's name, contribution date, and amount.
For each contribution of $250 or more, the IRS requires a contemporaneous written acknowledgment addressing the gift and any goods or services provided in exchange. A bank statement alone does not replace that acknowledgment.
Noncash contributions can require additional reporting and, in some cases, a qualified appraisal. Identify those requirements early enough to obtain the necessary support.
Give the team a consistent year-end review process
A focused client request can make this work easier to manage. Ask for:
- Gifts already made during 2026 and any contributions still planned.
- Recipient details and donation receipts or acknowledgments.
- Updated income information and significant financial changes.
- Details of proposed noncash gifts.
- Prior charitable carryover records, where relevant.
Assign someone to gather the information and someone to evaluate the tax treatment. Record unresolved questions, client decisions, and follow-up dates in the engagement file.
Update the firm's organizer and client-facing explanations for the 2027 filing season as well. Staff should know to request charitable information from eligible nonitemizers and to distinguish it from the information needed for itemized deductions.
Where a firm needs additional technical capacity, SAM provides tax research and advisory support through its U.S.-based CPA and EA network. A defined research question and a complete set of client facts make that support more useful.
Conclusion
The 2026 charitable deduction changes give CPA firms a specific reason to reconnect with clients before year-end. Confirm the expected filing approach, evaluate the planned gifts, and collect the records needed to support the result.
Doing that work now gives clients time to make informed decisions and gives the firm a clearer starting point when preparing their 2026 returns.
