may want to modify for 35% rate limitation.
Also, the deduction for people who do not itemized limited based on income.
I looked and looks like no income-limitation for people who take standard deduction to take the 1k/2k but has to be cash and not to a DAF.
If you’re a Self-employed who gives to charity—and especially if you’re planning your 2026 tax strategy—it’s time to take note of a major change. The “One Big Beautiful Bill” (OBBB), signed into law in July 2025, introduces new rules for charitable deductions that affect both standard and itemized filers. Whether you donate regularly or are considering a year-end gift, these updates could impact how much of your generosity is tax-deductible.
Here’s a breakdown of what’s changing and how it may affect your Self-employed finances.
A Win for Non-Itemizers: The Return of the Universal Charitable Deduction
For the roughly 90% of taxpayers who take the standard deduction—including many Self-employed with streamlined returns—the OBBB reintroduces a universal charitable deduction for cash donations to qualifying public charities. This provision was temporarily available during the pandemic years and is now back, with some limitations.
Deduction Amount: Up to $1,000 for single filers and $2,000 for married couples filing jointly
Eligible Donations: Must be cash gifts to qualifying public charities
Exclusions: Donations to donor-advised funds and private non-operating foundations do not qualify
This change is designed to re-incentivize charitable giving among taxpayers who don’t itemize. For Self-employed who give modestly but consistently, it’s a welcome opportunity to reduce taxable income while supporting causes they care about.
Planning Tip: If you typically take the standard deduction, consider timing your charitable gifts to maximize this benefit. Keep clear records of your donations and confirm that the organizations qualify under IRS guidelines.
New Limits for Itemizers: Floors and Caps That May Reduce Deductions
If you itemize your deductions—perhaps because of mortgage interest, medical expenses, or higher charitable giving—the OBBB introduces two new limitations that primarily affect higher-income taxpayers.
0.5% of AGI Floor
Charitable contributions are only deductible to the extent they exceed 0.5% of your Adjusted Gross Income (AGI). This means small donations may no longer be deductible unless they cross that threshold.
Example: If your AGI is $500,000, only charitable donations above $2,500 ($500,000 x 0.5%) are deductible.
35% Deduction Rate Cap
For taxpayers in the top 37% tax bracket, the value of itemized deductions—including charitable gifts—is capped at a 35% tax benefit. This reduces the tax savings from each dollar donated.
What This Means
High-income Self-employed who itemize may see a smaller tax benefit from charitable giving. While the deduction is still available, it’s subject to tighter rules that may require more strategic planning.
Planning Tip: If you’re in a higher tax bracket and give generously, consider working with a tax advisor to structure your giving. You may want to bunch donations into a single year, explore qualified charitable distributions (QCDs) if you’re over 70½, or evaluate the timing of gifts relative to your income.
What Self-employed Should Do Now
The OBBB’s charitable deduction changes take effect for the 2026 tax year, but smart Self-employed will start planning now. Here are a few steps to consider:
Review Your Giving Habits: Look at your past donations and decide whether you’ll itemize or take the standard deduction in 2026
Track Eligible Donations: Make sure your contributions go to qualifying public charities and keep detailed records
Consult a Tax Professional: If your income fluctuates or you’re unsure how these changes apply, a CPA can help you optimize your deductions
Stay Informed: Tax laws continue to evolve, and Self-employed need to stay ahead of the curve to avoid surprises at filing time
Final Thoughts
Charitable giving is a powerful way to support your community and reduce your tax bill—but the rules are shifting. The One Big Beautiful Bill reopens the door for non-itemizers to deduct modest donations, while placing new limits on high-income itemizers. As a Self-employed, understanding these changes now can help you make smarter financial decisions and keep your giving goals aligned with your tax strategy.
If you’re unsure how these updates affect your situation, don’t wait until 2026. Start the conversation with your tax advisor today—and keep giving with confidence.
