The latest news

On July 4, the new tax and spending bill was signed into law, including a version of the Charitable Act, a tax deduction for all taxpayers, regardless of their level of income, of $1,000 for individual tax filers and $2,000 for married couples filing jointly. The permanent provision is effective January 1, 2026. The Senate increased the amounts from the original House proposal of $150/$300, with foregone revenue (cost to the government in lost tax revenue) balanced by a 0.5% adjusted gross income (AGI) floor for itemizers. 

The Nonprofit Alliance and our fellow members of the Charitable Giving Coalition commend the leadership of Senators James Lankford (R-OK) and Chris Coons (D-DE), along with Representatives Blake Moore (R-UT), Danny Davis (D-IL), Carol Miller (R-WV), and Chris Pappas (D-NH), for championing the bipartisan Charitable Act (S. 317, H.R. 801), a critical piece of legislation that encourages all American taxpayers, regardless of income, to give more to charitable organizations that support communities in need.

The original text of the Charitable Act proposed a generous $5,000/$10,000 limit. In 2025, Capital Policy Analytics analyzed the expected impact on charitable contributions, as well as the cost of legislation in foregone tax revenue. Download the 3-page report here.

What is the issue?

Taxpayers can deduct from their taxable income the charitable donations they made to nonprofit 501(c)3 organizations, lowering their overall tax liability (see the sidebar for definitions of a few key terms).

As a general rule, charitable contributions can only be deducted if you itemize your personal deductions instead of taking the standard deduction. If you do not itemize, you do not get the benefit. A Universal Charitable Deduction allows people to deduct charitable contributions up to a maximum amount, regardless of their income level and whether they itemize or take the standard deduction, encouraging more giving from middle-income families.

Giving trends from 2020 and 2021, when the temporary non-itemizer charitable deduction was in place, indicate the deduction works. According to the Fundraising Effectiveness Project, charitable gifts of $300 — the cap of the temporary deduction in 2020 — increased by 28 percent on the last day of the year. Furthermore, interim Internal Revenue Service data for tax year 2021 shows 47 million households used the non-itemizer charitable deduction for donations totaling around $18 billion. A higher deduction cap in the Charitable Act would encourage even more charitable giving in communities nationwide.

Why do nonprofits care?

The ability for individuals to deduct charitable donations from their tax liability encourages charitable giving and the flow of financial resources to support nonprofit work.  

When a larger standard deduction went into effect in 2018, fewer people itemized and, therefore, fewer people were eligible for the tax incentive.

Recent history

The enactment of the Tax Cuts and Jobs Act (TCJA) of 2017 effectively doubled the Standard Deduction to $12,000 for individual taxpayers and $24,000 for married couples filing jointly. Adjusted for changes in the Consumer Price Index (CPI), these levels increased to $15,000 and $30,000 for 2025.

This change in the Standard Deduction reduced the number of taxpayers itemizing from approximately 30% of all taxpayers to just 7.5%. This meant that fewer than eight percent of taxpayers were eligible to receive a charitable contribution benefit.

In March 2020, the $2.2 trillion CARES Act of 2020 was signed into law, establishing a universal charitable deduction of $300 per taxpayer, regardless of whether filing as an individual or married, for the tax year 2020. Then, in December 2020, the $900 billion Consolidated Appropriations Act of 2021 was signed into law. This act included an increase for 2021 in the Universal Charitable Deduction for married couples filing jointly to $600. TNPA was a leading voice in the effort to enact this important deduction.

In late 2022, it appeared Congress would pass the package of 27 expired tax provisions, including the Universal Charitable Deduction, which expired on December 31, 2021. Unfortunately, Congress could not come to closure on the package.

Senators James Lankford (R-OK) and Chris Coons (D-DE) introduced their Universal Charitable Deduction legislation, renaming it from “The Universal Giving and Pandemic Response and Recovery Act” to simply the “Charitable Act” (bill number S. 566). It again called for a universal charitable deduction open to all taxpayers regardless of their income level, up to 1/3 of the current standard deduction, $15,000 for single tax filers and $30,000 for married couples filing jointly. Rather than being a one-year bill as was previously the case, The Charitable Act would have run for two years, 2024 and 2025.