For years, many people who donate to charity or give a tithe to their place of worship have been unable to deduct it on their tax returns.
That’s because the federal income tax deduction for charitable contributions is an itemized deduction. So it’s only available to people who itemize their tax deductions, not those who claim the standard deduction — which is now a vast majority of taxpayers.
But that changed when President Donald Trump signed the One Big Beautiful Bill Act into law in July.
This law contains two tax breaks that will allow Americans to write off certain monetary donations regardless of whether they itemize.
One of these new breaks is a deduction that starts in 2026, and the other is a tax credit that starts in 2027. Here’s how they will work.
A tax deduction for charitable donations
Two federal laws created during Trump’s first term allowed non-itemizers to deduct monetary donations of up to $300 in 2020 and up to $600 in 2021. But this tax break was temporary, created to encourage charity during the COVID-19 pandemic. So it ended after 2021.
Until now, that is: The One Big Beautiful Bill Act brought it back, increased its value and made it permanent.
The deduction will be available again starting with the 2026 tax year, meaning it will be available for charitable donations made in 2026 and beyond. So, if you were planning to make a year-end donation this year, you might want to postpone it until the new year.
It will enable married couples filing a non-itemized joint tax return to deduct up to $2,000 per year in cash donations to qualifying nonprofit organizations (meaning nonprofits that the IRS classifies as tax-exempt). All other non-itemizers will be able to write off up to $1,000 per year in cash donations.
How much money this saves you in taxes will depend on your tax rate. If you donate $2,000 in 2026 and your tax rate is 12%, it would lower your 2026 taxes by $240 ($2,000 x 0.12).
This deduction will also be available to people who itemize their deductions, but a 0.5% floor will apply: They can only use this deduction to write off up to $1,000 or $2,000 in donations to the extent that those particular donations exceed 0.5% of the total charitable contributions they made in a given year.
In other words, for itemizers, the value of this deduction will be reduced by 0.5% of their total donations.
This tax break will even be available to corporations, though a floor of 1% of their taxable income will apply.
A tax credit for scholarship donations
The One Big Beautiful Bill Act created a brand-new tax credit for monetary donations to scholarship-granting organizations that serve K-12 students from lower- and middle-class households.
The credit will be available starting with the 2027 tax year, and it will be worth up to $1,700 per year. It will be nonrefundable, meaning it can reduce your tax bill but generally cannot increase your refund.
If you donate more than $1,700 to a scholarship-granting organization in a given year, though, you can carry forward the excess.
For example, say you donate $2,000 to a scholarship-granting organization in 2027. You could claim a $1,700 credit on your 2027 tax return and a $300 credit on your 2028 return.
Lastly, in case you’re wondering: No, double-dipping is not allowed. So if you donate to a scholarship-granting organization, you can’t use the same donation to both claim the new tax credit and get a tax deduction.
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