Charitable Contributions and Itemized Deductions Under US Tax Rules
By SimplyCPA · 11 October 2026
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- Medical: Deductible only above 7.5% of AGI.
- State and local taxes (SALT): Capped at $40,400 for 2026 ($20,200 married filing separately), phasing down for high incomes but not below $10,000.
- Mortgage interest: On up to $750,000 of acquisition debt; home equity interest only if the loan was used to buy, build or improve the home.
- Charitable: Cash to public charities up to 60% of AGI; appreciated property generally 30%. From 2026, only gifts above 0.5% of the contribution base are deductible, and non-itemisers get up to $1,000 ($2,000 joint).
- Substantiation: A written acknowledgment for gifts of $250 or more; Form 8283 for non-cash gifts over $500; a qualified appraisal for most non-cash gifts over $5,000.
Itemized deductions on Schedule A
| Deduction | Rule |
|---|---|
| Medical and dental expenses | Amount above 7.5% of AGI |
| State and local taxes | Income or sales tax plus property taxes, capped at $40,400 for 2026 ($20,200 MFS); the cap phases down at higher incomes but not below $10,000 |
| Home mortgage interest | On acquisition debt up to $750,000 ($375,000 MFS), made permanent by the OBBBA |
| Investment interest | Up to net investment income |
| Charitable contributions | AGI-based limits (below), and a 0.5% floor from 2026 |
| Casualty and theft losses | Personal losses only in federally declared disaster areas, above $100 per event and 10% of AGI |
| Gambling losses | Up to gambling winnings |
Miscellaneous itemized deductions subject to the 2% floor (such as unreimbursed employee expenses and investment advisory fees) remain non-deductible — the OBBBA made their suspension permanent.
Charitable contribution limits
| Type of gift | To public charities | To most private non-operating foundations |
|---|---|---|
| Cash | 60% of AGI | 30% of AGI |
| Long-term capital gain property (deducted at fair value) | 30% of AGI | 20% of AGI (fair value only for qualified appreciated stock) |
| Ordinary income property and short-term capital gain property | Deduction limited to basis | Limited to basis |
Excess contributions carry forward for five years. Donating appreciated shares held for over a year is efficient: the donor deducts full fair value and never pays tax on the gain.
What changed in 2026
- 0.5% floor — itemisers can deduct charitable contributions only to the extent they exceed 0.5% of their contribution base.
- Non-itemiser deduction — up to $1,000 ($2,000 joint) of cash gifts to qualifying public charities, even when taking the standard deduction. Gifts to donor-advised funds and supporting organisations don't qualify.
- Cap on the benefit for top earners — the OBBBA limits the tax benefit of itemised deductions for taxpayers in the 37% bracket.
Example: A couple with AGI of $200,000 gives $9,000 in cash to public charities in 2026. The 0.5% floor is $1,000, so $8,000 is deductible if they itemise. With SALT of $18,000 and mortgage interest of $9,000, their itemised deductions are $35,000 — above the $32,200 standard deduction, so itemising saves tax on an extra $2,800.
Substantiation
- Any cash gift: a bank record or written communication from the charity.
- $250 or more: a contemporaneous written acknowledgment from the charity stating whether goods or services were received in return.
- Non-cash gifts over $500: Form 8283.
- Non-cash gifts over $5,000 (other than publicly traded securities): a qualified appraisal.
- Quid pro quo payments over $75 (such as a charity dinner): the charity must disclose the value received; only the excess is deductible.
See also individual tax planning and REG adjustments and deductions.