Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week she’s looking at five questions on changes to charitable deductions and other tax breaks that first take effect in 2026. (Get a free issue of The Kiplinger Tax Letter or subscribe.)
1. Charitable deduction for nonitemizers
Question: I generally claim the standard deduction when I file my Form 1040. I heard that next year I can deduct my charitable gifts even if I don’t itemize on Schedule A. Is this true?
Joy Taylor: Yes, but there is a limit. Last July’s “One Big Beautiful Bill” (OBBB) lets nonitemizers deduct up to $1,000 of charitable cash gifts, beginning with 2026 returns filed in 2027. The amount is $2,000 for joint filers.
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2. Charitable deduction haircut for itemizers
Question: I make lots of charitable gifts during the year, and I usually itemize on Schedule A. Did the OBBB make any changes to the charitable deduction for itemizers?
Joy Taylor: Yes. Starting with 2026 returns filed next year, charitable deductions claimed by itemizers on Schedule A get a bit of a haircut. The Schedule A charitable write-off is deductible only to the extent that total charitable donations exceed 0.5% of adjusted gross income (AGI). This is similar to the rules for deducting medical expenses, in which total eligible medical costs are deductible only to the extent they exceed 7.5% of AGI.
Here’s an example. Say your 2026 AGI is $232,000, and you donate $14,000 to charity in 2026. If you itemize, you can deduct $12,840 of charitable contributions on your 2026 tax return ($14,000-($232,000 x 0.005)).
3. Carryover of excess charitable donations
Question: Can excess charitable donations caught by the 0.5% haircut be carried forward to the succeeding year?
Joy Taylor: Generally, no. Take the example from Q&A 2, where you have a person with 2026 AGI of $232,000 and $14,000 in charitable contributions. The filer can deduct $12,840 of charitable contributions on his 2026 tax return. The excess $1,160 of donations generally cannot be carried forward to 2027 and is permanently lost.
There is one exception. If a taxpayer has charitable-contribution carryforwards for the year, for example, because total cash donations exceed 60% of AGI, then the amount disallowed because of the 0.5%-of-AGI floor will increase the carryforward. But if the taxpayer has no current-year carryforwards, then the amount nixed because of the 0.5% rule is permanently lost.
4. Reduction in itemized deductions of upper-income filers
Question: My spouse and I have lots of income that we pay tax on each year, at the highest federal income tax rate. We always itemize on Schedule A. Are there any other changes to itemized deductions beginning in 2026, aside from the change to charitable contributions?
Joy Taylor: Yes. Beginning with 2026 returns filed in 2027, upper-income taxpayers will see their total itemized deductions reduced. Total itemized deductions will be decreased by 2/37 of the lesser of the amount of itemized deductions or the taxable income that exceeds the 37% federal income tax rate bracket amount. Some tax professionals describe this rule as effectively limiting the tax benefit of itemized deductions to 35%.
5. More changes for 2026
Question: Other than itemized deductions, did the OBBB enact any other big changes for individual filers that begin in 2026?
Answer: Yes. There are several OBBB tax changes that first take effect in 2026, meaning on 2026 tax returns that you file in 2027. Here are some of them:
- The maximum child and dependent care credit for working parents increases to $1,500 for one dependent and $3,000 for two or more dependents.
- Working parents can contribute up to $7,500 to a dependent-care flexible spending account at their workplace (the cap was $5,000 for many years).
- More money can be taken out of 529 plans to fund K-12 education. Beginning this year, you can withdraw up to $20,000 per year for this type of schooling, an increase of $10,000 from the prior-year cap. And more K-12 expenses are covered. Note that there is no limit on the amount of tax-free 529 payouts to pay for college.
- Forgiven college debt in 2026 or later years are no longer nontaxable. For 2021-2025, most student-loan indebtedness, including parent PLUS loans, that was forgiven in those years was tax-free for federal income tax purposes. This was an exception to the general rule that cancellation of debt income is taxable. The OBBB didn’t extend this relief, so college loans that are forgiven in 2026 or later are again generally taxable.
- Fewer people who buy health insurance on the marketplace will qualify for the health premium tax credit, and the credit will be lower for many than in past years.
About Ask the Editor, Tax Edition
Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You’ll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.
We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!
Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.