Scope. This guide covers the charitable deduction changes enacted by the One Big Beautiful Bill Act (OBBBA), Pub. L. 119-21, signed July 4, 2025, Sec. 70424, as they affect IRC 170. It addresses the new non-itemizer deduction, the 0.5% AGI floor imposed on itemizing taxpayers, the elimination of the five-year carryforward for amounts disallowed by that floor, and how these changes layer on the pre-existing IRC 170 contribution framework. All statutory details, subsection designations, dollar amounts, and procedural references are subject to technical corrections, IRS guidance, and future legislative action. Verify current text at IRS.gov before advising any specific client.
This guide is for tax practitioners only. Nothing here constitutes legal, tax, or accounting advice for any specific situation. Verify every cited amount, rate, subsection designation, and form reference against current IRC text and IRS.gov for the applicable tax year.
All amounts, rates, and subsection designations below are as enacted (Pub. L. 119-21, Sec. 70424); verify current text and designations at IRS.gov.
Permanent above-the-line cash charitable deduction for non-itemizers: up to $1,000 (single) or $2,000 (MFJ) (as enacted; verify at IRS.gov). Cash contributions only. Public 501(c)(3) only. Donor-advised funds and private foundations excluded. No sunset.
Itemizers must reduce total deductible charitable contributions by 0.5% of AGI before applying the standard IRC 170(b) percentage limits (as enacted; verify at IRS.gov). Applies to all itemizers, not just high-income filers.
Amounts disallowed solely by the 0.5% AGI floor do NOT carry forward to future tax years (as enacted; verify at IRS.gov). This differs materially from the pre-OBBBA five-year carryforward rule. See Section 5.
The 30%, 50%, and 60%-of-AGI contribution limits for itemizers are NOT repealed by OBBBA. They continue to apply after the 0.5% floor reduction. The floor applies first; then the percentage limits apply to the reduced amount.
The OBBBA amendments to IRC 170 were enacted as Pub. L. 119-21, Sec. 70424. References to specific subsection letter designations (such as IRC 170(p) for the non-itemizer deduction or IRC 170(s) for the AGI floor, as these designations appear in practitioner commentary) must be verified against the current codified IRC text, because technical corrections enacted after the OBBBA signing date may alter letter assignments. This guide uses "the applicable OBBBA amendment to IRC 170 (as enacted by Pub. L. 119-21, Sec. 70424; verify current subsection designation and text at IRS.gov)" throughout in place of any specific subsection letter designation.
Before OBBBA, the charitable contribution deduction under IRC 170 was available only to taxpayers who itemized their deductions on Schedule A. Non-itemizers received no federal income tax benefit from cash charitable contributions (the temporary COVID-era above-the-line deduction having fully expired). For itemizers, the deductible amount was limited by type-of-organization and type-of-property percentage ceilings expressed as a fraction of adjusted gross income (AGI):
Substantiation requirements under IRC 170(f) applied, including the contemporaneous written acknowledgment (CWA) rule for contributions of $250 or more (verify at IRS.gov). These substantiation requirements were not repealed or relaxed by OBBBA and continue to apply in full.
The OBBBA (Pub. L. 119-21, Sec. 70424, signed July 4, 2025) made three principal amendments to IRC 170. The existing IRC 170 framework was not repealed; the OBBBA changes layer on top of it:
The following pre-OBBBA IRC 170 rules remain in effect (verify current text at IRS.gov):
As of July 2026, the IRS has not issued comprehensive regulatory guidance addressing all interactions between the new OBBBA provisions and the pre-existing IRC 170 framework. Practitioners should monitor IRS.gov for notices, revenue procedures, and proposed or temporary regulations. Open areas are addressed in Section 11 of this guide.
The non-itemizer deduction is available to taxpayers who claim the standard deduction and do not file Schedule A. A taxpayer who itemizes in a given tax year cannot also claim the non-itemizer deduction for that year; the two are mutually exclusive. Married filing separately taxpayers should verify the applicable treatment at IRS.gov, as special rules may apply.
The applicable OBBBA amendment to IRC 170 (as enacted by Pub. L. 119-21, Sec. 70424; verify current subsection designation and text at IRS.gov) provides limited deduction amounts per filing status. Based on the enacted text, those amounts are:
These figures represent the maximum deductible amount, not an automatic deduction. The taxpayer must have made qualifying cash contributions in at least the claimed amount during the tax year, and must be able to substantiate the contributions.
The enacted text of the applicable OBBBA amendment should be reviewed to determine whether the $1,000 and $2,000 limits (as enacted; verify at IRS.gov) are indexed for inflation in future years. If inflation adjustments apply, the IRS will publish updated amounts annually. Verify the current indexed limit at IRS.gov for each applicable tax year before advising or filing.
The non-itemizer deduction is enacted as a permanent feature of IRC 170 with no sunset date. There is no expiration clause in the enacted text. However, Congress may amend or repeal the provision in any future legislative session. Practitioners should confirm the continuing statutory status at IRS.gov.
The non-itemizer deduction applies to cash contributions only. For this purpose, "cash" includes currency, personal checks, money orders, credit card charges, debit card payments, and electronic funds transfers made directly to the qualifying organization. It does not include contributions of:
Verify what constitutes "cash" for this purpose under current IRS guidance and instructions at IRS.gov. Taxpayers wishing to deduct non-cash charitable contributions must itemize and comply with the IRC 170(f) qualified appraisal and substantiation rules applicable to property contributions.
The non-itemizer deduction is available only for contributions to public 501(c)(3) organizations as defined under IRC 509(a) (verify at IRS.gov). Qualifying organizations generally include:
Use the IRS Tax Exempt Organization Search tool at IRS.gov to confirm an organization's 501(c)(3) status and public charity classification as of the date of contribution. An organization's listing in the database is strong but not conclusive evidence of qualifying status; confirm with the organization if any uncertainty exists.
Contributions to donor-advised funds (as defined under IRC 4966(d)(2); verify at IRS.gov) and to private foundations (as defined under IRC 509(a); verify at IRS.gov) do NOT qualify for the non-itemizer deduction under the applicable OBBBA amendment to IRC 170 (as enacted by Pub. L. 119-21, Sec. 70424; verify at IRS.gov).
This exclusion is a frequent source of client and practitioner error. A taxpayer who contributes cash to a donor-advised fund account (a DAF, as defined in IRC 4966(d)(2); verify at IRS.gov) held at a community foundation, a financial institution's DAF program, or any other 501(c)(3) sponsoring organization cannot claim the non-itemizer deduction for that contribution, even though the sponsoring organization is itself a public charity. The test is whether the specific gift creates or adds to a DAF, not whether the recipient entity is a public charity in another capacity.
Similarly, contributions to private foundations (as classified under IRC 509(a); verify at IRS.gov), including private operating foundations, do not qualify for the non-itemizer deduction. Itemizers may continue to deduct contributions to certain private foundations under the existing IRC 170 framework (subject to the 30% AGI limit and the 0.5% floor); the non-itemizer deduction simply does not apply to such contributions.
Before claiming the non-itemizer deduction, confirm that (1) the recipient organization is a public 501(c)(3) charity and (2) the contribution is a direct gift to the organization for its own programs, not a contribution to or for a donor-advised fund. Verify at IRS.gov.
The non-itemizer deduction is designed to reduce the taxpayer's federal income tax liability above and beyond the standard deduction. Non-itemizers who claim the standard deduction are not required to forgo the non-itemizer charitable deduction; the two coexist. The deduction reduces either AGI (if treated as an above-the-line adjustment) or taxable income at the level of Form 1040 depending on where the IRS instructs taxpayers to report it. Verify the current Form 1040 and Schedule 1 reporting position at IRS.gov for the applicable tax year.
As of July 2026, the IRS has not issued final Form 1040 or Schedule 1 instructions for tax year 2026 that identify the exact line on which the non-itemizer charitable deduction is reported. The deduction may appear on Schedule 1 (Part II, Additional Income and Adjustments) or on a new dedicated line of Form 1040. Do not rely on any prior-year form, placeholder, or unofficial reference for the reporting line.
Verify the current Form 1040 and Schedule 1 line placement at IRS.gov, and review the final Instructions to Form 1040 for the applicable tax year before completing, filing, or advising clients on returns.
The applicable OBBBA amendment to IRC 170 (Pub. L. 119-21; verify current text and subsection designation at IRS.gov) imposes an AGI-based floor on charitable deductions for itemizing taxpayers. Before an itemizer applies the standard IRC 170(b) percentage limits, the taxpayer must reduce total deductible charitable contributions by an amount equal to 0.5% of the taxpayer's AGI for that year (as enacted in the applicable OBBBA amendment to IRC 170 (Pub. L. 119-21); verify the current rate and computation method at IRS.gov).
The floor is not a floor in the sense of a minimum contribution required to claim any deduction; it is a reduction applied to the otherwise deductible amount. Even taxpayers with modest charitable giving will see a portion of their deduction reduced by the floor.
The 0.5% AGI floor is applied as an initial reduction before the IRC 170(b) percentage limits. The calculation sequence is (verify each step against current IRS guidance at IRS.gov):
| Calculation Item | Pre-OBBBA (Illustrative) | Post-OBBBA (Illustrative) |
|---|---|---|
| AGI (illustrative) | $200,000 | $200,000 |
| Cash contribution to public charity (illustrative) | $10,000 | $10,000 |
| 0.5% AGI floor (verify rate at IRS.gov) | N/A | $1,000 (0.005 x $200,000) |
| Floor-reduced contribution amount | $10,000 | $9,000 |
| 60%-of-AGI limit (verify at IRS.gov) | $120,000 | $120,000 |
| Deductible amount | $10,000 | $9,000 |
| Floor-disallowed amount (no carryforward) | N/A | $1,000 (lost permanently; see Section 5) |
| Percentage-limit carryforward | $0 (within 60% limit) | $0 (floor-reduced amount is within 60% limit) |
Illustration uses arbitrary figures for educational purposes only. All rates, amounts, and limits must be verified against current IRC text and IRS.gov for the applicable tax year. Individual results depend on actual AGI, contribution amounts, organization types, and property types.
The 0.5% AGI floor applies to all itemizing taxpayers who take charitable contribution deductions, regardless of income level. There is no AGI threshold above which the floor begins; it applies from the first dollar of charitable contribution by any itemizer. A taxpayer with $50,000 AGI and $500 of charitable contributions has a floor of $250, reducing the deductible amount to $250 (verify at IRS.gov). A taxpayer with $5,000,000 AGI and $100,000 of contributions has a floor of $25,000, reducing the deductible amount to $75,000 before the percentage limits apply.
The OBBBA floor does not replace or modify the existing IRC 170(b) percentage limits. Both apply sequentially:
In high-contribution years where a taxpayer's giving approaches or reaches the percentage ceiling, the floor compounds the limitation: the ceiling now applies to a smaller base amount, meaning more of the gross contribution may be permanently lost to the floor rather than carried forward.
Whether and how the 0.5% AGI floor applies to non-cash property contributions (appreciated capital gain property, ordinary income property, conservation easements, etc.) should be verified against current IRS guidance and regulations at IRS.gov. As of July 2026, it is not fully settled whether the floor operates on an aggregate basis across all contribution types for the year, or whether it applies contribution-type by contribution-type. Practitioners should monitor IRS.gov for forthcoming guidance addressing mixed-contribution-type years.
Because the floor-disallowed amount is permanently lost (no carryforward; see Section 5), income acceleration events that increase AGI in a given year (such as a business sale, a large Roth conversion, or a taxable investment event) simultaneously increase the floor amount and permanently reduce the charitable deduction for that year. Practitioners should model the floor impact when advising on income-acceleration strategies and consider whether charitable giving can be shifted to a year with lower AGI to minimize permanently lost deductions.
Amounts disallowed solely by reason of the 0.5% AGI floor do NOT carry forward to future taxable years under the applicable OBBBA amendment to IRC 170 (as enacted by Pub. L. 119-21, Sec. 70424; verify current subsection designation and text at IRS.gov).
This is a material departure from pre-OBBBA IRC 170(d), under which excess contributions not deductible in the current year due to the applicable AGI percentage limit could be carried forward and deducted in the five succeeding taxable years (IRC 170(d); verify current carryforward rules at IRS.gov). Under OBBBA, that five-year window does not apply to the portion of contributions disallowed specifically because of the 0.5% floor.
The carryforward elimination applies only to amounts disallowed by the floor, not to amounts disallowed because they exceed the applicable IRC 170(b) percentage limit. Amounts disallowed because they exceed the 60%, 50%, or 30% AGI ceiling (as applicable; verify at IRS.gov) retain their five-year carryforward treatment under IRC 170(d). The distinction between floor-disallowed and percentage-limit-disallowed amounts is therefore critical for multi-year carryforward tracking and reporting.
Practitioners should flag this issue for every client with material charitable contributions relative to AGI, update all existing multi-year contribution planning models, and revise carryforward schedules to segregate the two categories of disallowed amounts.
Because the carryforward treatment differs based on the reason for disallowance, practitioners must separately identify and track two categories of disallowed charitable contributions each year:
In the calculation sequence described in Section 4, the floor reduction (Step 2) generates the Category A amount; any excess over the percentage ceiling (Step 3) generates the Category B amount. The ordering matters for recordkeeping: the floor applies before the ceiling.
| Item | Amount (Illustrative) | Carryforward? |
|---|---|---|
| AGI (illustrative) | $100,000 | |
| Cash contribution to public charity (illustrative) | $65,000 | |
| 0.5% AGI floor (verify rate at IRS.gov) | $500 (Category A: no carryforward) | No |
| Floor-reduced amount | $64,500 | |
| 60%-of-AGI ceiling (verify at IRS.gov) | $60,000 | |
| Deductible in current year | $60,000 | N/A |
| Excess over 60% ceiling (Category B) | $4,500 | Yes: 5-year carryforward (IRC 170(d); verify at IRS.gov) |
| Floor-disallowed amount (Category A) | $500 | No: permanently lost |
Illustrative only. All rates, amounts, and limits must be verified against current IRC text and IRS.gov. Individual results depend on actual AGI, contributions, organization types, and property types.
Existing carryforward schedules maintained for clients should be updated to separately track Category A amounts (floor-disallowed; no carryforward) and Category B amounts (percentage-limit-disallowed; five-year carryforward). Failure to distinguish these categories in current and future years could result in improper deduction of floor-disallowed amounts in carryforward years, which would overstate deductions on future returns.
Document the calculation methodology clearly in client files pending IRS guidance on tracking worksheets. The IRS may issue updated Instructions to Schedule A or a standalone worksheet addressing this distinction. Monitor IRS.gov.
For clients with existing IRC 170 carryforward balances established in pre-OBBBA years, confirm that those amounts are Category B amounts (excess over percentage limits) that originated under prior law and retain their five-year carryforward. Only amounts generated on or after the OBBBA effective date are subject to the new carryforward elimination rule, and then only with respect to the floor-disallowed portion.
Maintain clear documentation of the tax year of origin, the character (floor-disallowed vs. percentage-limit-disallowed), and the applicable carryforward rules for each component of any carryforward balance. Commingling floor-disallowed and percentage-limit-disallowed amounts in a single carryforward schedule creates risk of overstating future deductions.
For the non-itemizer deduction, contributions must be made to a public charity under IRC 501(c)(3) and IRC 509(a) (verify at IRS.gov). The organization must:
The statutory categories of public charities include churches and religious organizations, educational institutions, hospitals and medical research organizations, governmental units, and publicly supported organizations meeting the support tests of IRC 509(a)(1) or (2) or the supporting organization rules of IRC 509(a)(3). Verify the current public charity classification rules at IRS.gov.
The IRS maintains the Tax Exempt Organization Search (TEOS) database at IRS.gov, which practitioners and taxpayers can use to confirm an organization's current exempt status, IRC 501(c)(3) classification, and public charity or private foundation status. Verify organization status as of the date of contribution, not merely at year-end. An organization may have its exemption revoked during the tax year. Maintain a printout or screenshot of the TEOS result as part of the client file.
A donor-advised fund, as defined in IRC 4966(d)(2) (verify at IRS.gov), is a fund or account that satisfies all of the following:
Common examples include DAF accounts maintained at community foundations, financial institution-affiliated public charities (such as Fidelity Charitable, Schwab Charitable, and Vanguard Charitable), single-issue DAF sponsors, and religious organization-affiliated DAF programs. The exclusion applies to the contribution to the DAF regardless of which sponsoring organization holds the fund.
For itemizers, contributions to donor-advised funds may still be deductible under the existing IRC 170 framework (typically subject to the 60% AGI limit for cash contributions; verify at IRS.gov), subject to the OBBBA 0.5% AGI floor. The non-itemizer deduction simply does not extend to DAF contributions.
A private foundation is defined under IRC 509(a) (verify at IRS.gov) as a domestic or foreign IRC 501(c)(3) organization that is not otherwise described in IRC 509(a)(1), (2), or (3) (the public charity categories). Private foundations include family foundations, corporate foundations, independent foundations, and private operating foundations unless those operating foundations qualify as public charities under applicable rules (verify at IRS.gov).
Contributions to private foundations do not qualify for the non-itemizer deduction. Itemizers may still deduct contributions to qualifying private foundations under the existing IRC 170(b) limits (typically 30% of AGI for cash contributions to private foundations; verify at IRS.gov), subject to the OBBBA 0.5% floor.
The following organization types do not qualify for the non-itemizer deduction (verify each at IRS.gov):
The non-itemizer deduction is available only for cash contributions. Verify what constitutes "cash" under current IRS instructions at IRS.gov for the applicable tax year. Based on the enacted text (Pub. L. 119-21, Sec. 70424; verify at IRS.gov), cash includes:
The following do not qualify as cash for the non-itemizer deduction, and non-itemizers may not deduct these contribution types:
The substantiation rules of IRC 170(f) (verify current requirements at IRS.gov) apply to the non-itemizer deduction. These requirements were not relaxed by OBBBA:
The IRC 170(f) substantiation requirements are a condition to deductibility. A contribution that is otherwise qualifying in all respects is not deductible if it lacks the required substantiation documentation. The IRS has consistently litigated and prevailed on substantiation failures, and courts have strictly enforced the "contemporaneous" timing requirement for CWAs. Practitioners should advise clients to obtain the CWA before the filing deadline and retain it for the applicable statute of limitations period. Verify current CWA requirements at IRS.gov.
Where a taxpayer receives goods or services in exchange for a contribution (a quid pro quo contribution), only the amount by which the payment exceeds the fair market value of the goods or services received is deductible (IRC 170(f)(8)(B); verify at IRS.gov). This rule applies equally to the non-itemizer deduction. Organizations that receive more than $75 in quid pro quo contributions must provide written disclosure to the donor (IRC 6115; verify current threshold and requirements at IRS.gov). Common examples include charity dinners (where the ticket price exceeds the fair market value of the meal) and charity auctions (where a bidder pays more than fair market value for an item).
Employees who make charitable contributions through employer payroll deduction programs should verify whether the specific mechanism results in a direct cash transfer to the qualifying public charity, and whether the substantiation documentation (typically a pay stub or pledge card combined with a W-2 or employer-provided statement) satisfies the IRC 170(f) requirements for the non-itemizer deduction. Verify current guidance at IRS.gov and consult the employer's payroll deduction program documentation.
As of July 2026, the IRS has not issued final Form 1040 or Schedule 1 instructions for tax year 2026. The IRS is expected to issue updated forms and instructions reflecting the OBBBA changes before the 2026 filing season. Until final instructions are published, the exact Form 1040 line number and Schedule 1 reporting position for the non-itemizer charitable deduction are not confirmed. Verify current Form 1040 and Schedule 1 instructions at IRS.gov for the applicable tax year before completing or filing any return.
Do not rely on any prior-year Form 1040, Schedule 1, draft form, or unofficial guidance for the reporting line of the non-itemizer charitable deduction. The IRS must update official forms and instructions to reflect the OBBBA changes, and the final line placement may differ from what appears in any draft or early release version.
Verify the final Form 1040 and Schedule 1 instructions at IRS.gov before filing returns or advising clients on line placement. For any client whose return is prepared before the final instructions are published, consider delaying or filing on extension to ensure correct reporting.
Itemizing taxpayers continue to report charitable contributions on Schedule A (Itemized Deductions). Under OBBBA, the 0.5% AGI floor must be calculated and the gross contribution amount reduced before entering the deductible amount on Schedule A. As of July 2026, it is not confirmed whether:
Verify current Schedule A instructions at IRS.gov for the applicable tax year. Document your floor calculation methodology in the client file pending the publication of official IRS worksheets or instructions.
Where a client has both (a) floor-disallowed amounts (Category A; no carryforward) and (b) percentage-limit-disallowed amounts (Category B; five-year carryforward under IRC 170(d); verify at IRS.gov), maintain separate schedule lines for each category. This distinction must be carried forward into future years' workpapers to ensure that Category A amounts are not erroneously deducted as carryforward amounts in subsequent years.
State income tax returns may or may not conform to the OBBBA changes. See Section 10 (State Tax Overlay) for discussion. State filing positions may require separate adjustments if a state does not conform to the non-itemizer deduction, the 0.5% floor, or the carryforward elimination. Verify at the applicable state Department of Revenue.
A charitable remainder trust (CRT) under IRC 664 (verify current requirements at IRS.gov) is a split-interest trust that pays an annuity or unitrust amount to a non-charitable beneficiary for life or a term of years, with the remainder passing to a qualifying charitable organization. The donor claims an IRC 170 charitable contribution deduction for the present value of the remainder interest at the time of funding (subject to applicable percentage limits, qualified appraisal requirements, and substantiation rules; verify at IRS.gov).
CRT contributions are typically funded with appreciated non-cash property (publicly traded stock, real estate, closely held business interests), not with cash alone. Accordingly, CRT contributions do not qualify for the non-itemizer deduction (which applies to cash only). They remain subject to the itemizer IRC 170 framework, including the 0.5% AGI floor. Practitioners should model the floor's effect on the deductible amount in the CRT funding year, particularly where the donor's AGI is elevated due to the CRT's tax-free sale of the contributed property. Verify all CRT deduction rules at IRS.gov and IRC 664.
A qualified charitable distribution (QCD) under IRC 408(d)(8) (verify current age requirement, annual limit, and organization eligibility at IRS.gov) allows an IRA owner who is at least 70.5 years old to direct a transfer directly from the IRA custodian to a qualifying charitable organization, excluding the transferred amount from the IRA owner's gross income. The QCD counts toward the required minimum distribution (RMD) for the year (verify at IRS.gov).
Because a QCD is excluded from income rather than deducted under IRC 170, neither the non-itemizer deduction nor the 0.5% AGI floor applies to the QCD amount. The QCD is a separate and distinct mechanism that operates entirely outside the IRC 170 deduction framework. However:
Verify current QCD rules, annual limits, and organization eligibility requirements at IRS.gov. Note that donor-advised funds and private foundations are generally not qualifying recipients for QCDs (verify at IRS.gov), paralleling their exclusion from the non-itemizer deduction.
A taxpayer who contributes long-term capital gain property (such as publicly traded stock held for more than one year) to a public charity may deduct the fair market value of the property without recognizing the built-in gain, subject to the 30% AGI limit (verify at IRS.gov). This strategy is available only to itemizers and is not available under the non-itemizer deduction (which applies to cash only). For itemizers who contribute appreciated property:
The appreciated property strategy remains one of the most tax-efficient giving mechanisms for itemizers with low-basis investments. The OBBBA floor reduces but does not eliminate this advantage.
The 0.5% AGI floor reduces the value of modest annual charitable contributions for itemizers, since a portion of each year's giving is permanently lost. Contribution-bunching strategies ( consolidating multiple years' giving into a single tax year to maximize the deduction in that year while claiming the standard deduction in alternating years) may be worth modeling for clients who are near the standard deduction threshold. Key considerations:
State income tax treatment of the OBBBA changes to IRC 170 is determined independently by each state and varies widely. States fall into four broad categories:
States with rolling (automatic) conformity to the Internal Revenue Code generally adopt changes to the IRC as enacted, including the OBBBA changes to IRC 170, as of the federal effective date. However, rolling conformity states frequently maintain specific decoupling provisions for selected federal provisions, even where their general posture is rolling. Verify whether a rolling conformity state has enacted or proposes to enact any decoupling from the OBBBA charitable deduction provisions at the applicable state Department of Revenue (DOR) or Tax Commission.
States with static conformity adopt the IRC as of a fixed reference date and do not automatically incorporate changes enacted after that date. These states require affirmative legislative action to conform to OBBBA. Where a static conformity state has not yet acted to adopt the OBBBA changes, the pre-OBBBA IRC 170 rules (as of the state's conformity date) apply for state purposes. Check the applicable state DOR for the current conformity date and any post-OBBBA conformity legislation.
Some states may adopt certain OBBBA IRC 170 provisions while decoupling from others. For example, a state might conform to the non-itemizer deduction but not to the 0.5% AGI floor, or conform to the floor but retain the pre-OBBBA five-year carryforward for floor-disallowed amounts. Each provision must be analyzed separately under state law.
States with no individual income tax (such as states that have eliminated or never enacted an income tax) are not affected by the OBBBA IRC 170 changes for state tax purposes. States with individual income taxes based on a non-federal measure (e.g., a flat tax or wage-only tax that does not incorporate federal AGI or deduction concepts) may also be unaffected. Verify at the applicable state DOR.
Do not assume conformity to any OBBBA IRC 170 provision based on federal law alone. State conformity status must be verified for each state individually at the applicable state Department of Revenue, Tax Commission, or equivalent authority. As of July 2026, a number of states have not yet published formal guidance on their conformity to the OBBBA charitable deduction provisions.
For multi-state filers, the conformity analysis must be completed for each state of filing. Incorrect assumption of state conformity can result in understated state taxable income, underpayment of state tax, and exposure to penalties and interest. Monitor each applicable state tax authority's website, legislative tracker, and published bulletins for OBBBA conformity updates throughout the 2026 filing season.
Even where a state conforms to the federal IRC 170 changes, the state's definition of a qualifying organization, public charity, or donor-advised fund may differ from the federal definitions in IRC 509(a) and IRC 4966(d)(2). Verify qualifying organization status under both federal and state law at the applicable state DOR.
The following areas remain subject to IRS clarification as of July 2026. Practitioners should monitor IRS.gov for notices, revenue procedures, announcements, and proposed or temporary regulations addressing these items.
Use this checklist for each client with charitable contribution activity in any tax year governed by the OBBBA changes. Verify each item against current IRC text and IRS.gov for the applicable tax year before filing or advising.
No. Contributions to donor-advised funds (as defined under IRC 4966(d)(2); verify at IRS.gov) are excluded from the non-itemizer deduction under the applicable OBBBA amendment to IRC 170 (as enacted by Pub. L. 119-21, Sec. 70424; verify at IRS.gov). The non-itemizer deduction requires a direct cash gift to a qualifying public 501(c)(3) organization for its own programs. A gift to or for a donor-advised fund does not qualify, even if the sponsoring organization is itself a public charity.
No. The 0.5% AGI floor applies to all itemizing taxpayers who take charitable deductions, regardless of income. There is no income threshold below which the floor does not apply. A taxpayer with $40,000 of AGI and $2,000 of contributions has a floor of $200 (0.5% x $40,000), reducing the deductible amount to $1,800. Verify all amounts and calculations at IRS.gov for the applicable tax year.
No. Amounts disallowed solely by the 0.5% AGI floor have no carryforward under the applicable OBBBA amendment to IRC 170 (as enacted by Pub. L. 119-21, Sec. 70424; verify current text at IRS.gov). These amounts are permanently lost in the year of contribution. Only amounts disallowed because they exceed the applicable IRC 170(b) percentage ceiling (60%, 50%, or 30% of AGI; verify at IRS.gov) retain the five-year carryforward under IRC 170(d). Practitioners must separately track floor-disallowed and percentage-limit-disallowed amounts.
No. The non-itemizer deduction applies to cash contributions only. A gift of appreciated stock or any other non-cash property does not qualify for the non-itemizer deduction. To deduct an appreciated property gift, the taxpayer must itemize and comply with the applicable IRC 170(b) percentage limits and IRC 170(f) substantiation requirements, including qualified appraisal rules for non-cash contributions exceeding the applicable threshold (verify at IRS.gov). The 0.5% AGI floor also applies to appreciated property contributions made by itemizers. Verify all details at IRS.gov.
Generally, not directly. A QCD under IRC 408(d)(8) (verify current requirements and limits at IRS.gov) is excluded from gross income rather than deducted; it operates outside the IRC 170 deduction framework. The non-itemizer deduction limit and the 0.5% floor therefore do not directly apply to QCDs. However, a QCD reduces the IRA owner's AGI, which in turn reduces the 0.5% floor amount for itemizing clients. Practitioners should model the QCD amount and the floor calculation together for older clients who both itemize and make QCDs, as the AGI-reduction benefit of QCDs is amplified under OBBBA. Verify at IRS.gov.
State conformity to OBBBA varies by state and by provision. Rolling conformity states may adopt the changes automatically; static conformity states require affirmative legislative action. Some states may conform to certain OBBBA IRC 170 provisions and decouple from others. As of July 2026, not all states have published formal conformity guidance on the OBBBA charitable deduction changes. Verify at the applicable state Department of Revenue, Tax Commission, or equivalent authority for each state in which the client has a filing obligation. Do not assume conformity.
Carryforward amounts established in pre-OBBBA years (as excess over percentage limits, i.e., Category B amounts) retain their five-year carryforward treatment under IRC 170(d) (verify at IRS.gov). The OBBBA carryforward elimination applies only to the floor-disallowed portion of contributions made in OBBBA-effective years. Pre-OBBBA carryforward amounts are not retroactively affected. However, practitioners should update carryforward schedules to clearly segregate pre-OBBBA carryforward balances from any OBBBA-era Category A and Category B amounts. Verify at IRS.gov.
The following table lists each material factual claim made in this guide, the statutory or regulatory source supporting it, and the mandatory verification instruction. All claims are subject to technical corrections, IRS guidance, and legislative change. Verify every claim against current IRC text and IRS.gov before advising any client.
| Claim | Source / Authority | Verification Instruction |
|---|---|---|
| Non-itemizer deduction: $1,000 single filer | Applicable OBBBA amendment to IRC 170, Pub. L. 119-21, Sec. 70424 | Verify current amount and any inflation adjustment at IRS.gov for the applicable tax year |
| Non-itemizer deduction: $2,000 MFJ | Applicable OBBBA amendment to IRC 170, Pub. L. 119-21, Sec. 70424 | Verify current amount and any inflation adjustment at IRS.gov for the applicable tax year |
| 0.5% AGI floor for itemizers | Applicable OBBBA amendment to IRC 170, Pub. L. 119-21, Sec. 70424 | Verify current rate, computation method, and any IRS guidance at IRS.gov |
| No carryforward for floor-disallowed amounts | Applicable OBBBA amendment to IRC 170, Pub. L. 119-21, Sec. 70424 | Verify current text, any technical corrections, and IRS guidance at IRS.gov |
| Five-year carryforward for percentage-limit-disallowed amounts (IRC 170(d)) | IRC 170(d), pre-OBBBA, unmodified by OBBBA with respect to Category B amounts | Verify current IRC 170(d) text at IRS.gov |
| Existing 60%, 50%, and 30% AGI limits not repealed | IRC 170(b), pre-OBBBA, confirmed not repealed by OBBBA | Verify current IRC 170(b) text and applicable limits at IRS.gov |
| DAF exclusion from non-itemizer deduction | Applicable OBBBA amendment; IRC 4966(d)(2) (DAF definition) | Verify exclusion scope and DAF definition at IRS.gov |
| Private foundation exclusion from non-itemizer deduction | Applicable OBBBA amendment; IRC 509(a) (private foundation definition) | Verify exclusion scope and private foundation classification at IRS.gov |
| Public charity definition: IRC 501(c)(3) and IRC 509(a) | IRC 501(c)(3); IRC 509(a) | Verify at IRS.gov; confirm via IRS Tax Exempt Organization Search |
| Cash substantiation: bank record required (any amount) | IRC 170(f)(17) | Verify current substantiation requirements at IRS.gov |
| CWA required for contributions of $250 or more | IRC 170(f)(8) | Verify current CWA threshold and requirements at IRS.gov |
| QCD: excludes IRA transfers from gross income for taxpayers 70.5+ | IRC 408(d)(8) | Verify current age requirement, annual limit, and organization eligibility at IRS.gov |
| CRT charitable deduction for remainder interest under IRC 664 | IRC 664; IRC 170 (applicable subsections for split-interest contributions) | Verify current CRT deduction rules, percentage limits, and qualified appraisal requirements at IRS.gov |
| Quid pro quo disclosure threshold ($75 or more) | IRC 6115 | Verify current threshold and disclosure requirements at IRS.gov |
| Non-itemizer deduction is permanent (no sunset) | Applicable OBBBA amendment, Pub. L. 119-21 | Verify that no subsequent legislation has modified or repealed the provision at IRS.gov |
| OBBBA enactment: Pub. L. 119-21, signed July 4, 2025, Sec. 70424 | Pub. L. 119-21 | Verify at Congress.gov and IRS.gov; confirm effective date provisions |
| Subsection letter designations (IRC 170(p), IRC 170(s)) pending confirmation | Practitioner commentary; subject to technical corrections and codification | Verify final subsection designations in the current codified IRC and at IRS.gov before citing in any filing or advice |