By Andrea Flores, owner of Simmer Tax and Accounting
A lot of business owners give to charity at the end of the year. The tax rules for charitable giving changed for 2026, and the changes work differently depending on whether you itemize your deductions or take the standard deduction. Here is what is new, in plain English.
If you take the standard deduction
Most people take the standard deduction. In the past, that meant charitable gifts did not lower their taxes at all. Starting in 2026, that changes. If you do not itemize, you can deduct up to $1,000 of cash gifts to qualifying charities, or up to $2,000 if you are married filing jointly.
There are limits. It has to be cash, which includes checks, card payments, and bank transfers. Gifts of clothing, stock, or other property do not count for this deduction. Gifts to a donor advised fund (an account you give through that sends money to charities later) generally do not count either. And gifts to individual people are never deductible.
If you itemize your deductions
If you itemize, there is a new floor starting in 2026. You can only deduct the part of your charitable gifts that is more than 0.5 percent of your adjusted gross income (your total income after a few allowed subtractions). For example, if your adjusted gross income is $200,000, the first $1,000 of gifts does not count. Gifts above that amount do. The IRS says amounts you cannot deduct because of this floor may carry over to a future year in some cases.
What this means for business owners
If your business is an LLC taxed as a partnership or an S corporation, charitable gifts made by the business usually pass through to your personal tax return. So these personal rules are the ones that matter for most small business owners. That is why it is important that business donations are recorded as donations in your bookkeeping, not mixed in with marketing or general expenses.
A sponsorship where your business gets advertising in return is often treated differently than a pure donation. That is a good question to ask your tax preparer before you give.
Keep the right records
Save receipts, canceled checks, or bank records for every gift. For larger gifts, you need a written acknowledgment from the charity. Clean bookkeeping makes this easy, because every donation is already tracked in one place with the date and amount.
A real person on our team reviews where donations land in your bookkeeping, because software often guesses wrong between a donation, a sponsorship, and a marketing expense.
This is general information, not tax advice for your specific situation.
If you want your bookkeeping set up so year end giving is tracked correctly, take our short quiz. It is three questions, and it tells you if we would be a good fit to work together.
https://simmertaxquiz.netlify.app/
Andrea
Common questions
Q: Can I deduct charitable donations if I take the standard deduction in 2026?
A: Yes. Starting in 2026, people who do not itemize can deduct up to $1,000 of cash gifts to qualifying charities, or up to $2,000 if married filing jointly.
Q: What is the 0.5 percent floor for charitable deductions?
A: Starting in 2026, people who itemize can only deduct charitable gifts above 0.5 percent of their adjusted gross income.
Q: Do donations to a donor advised fund count for the new non itemizer deduction?
A: Generally no. The new deduction for people who do not itemize is for cash gifts to qualifying charities, and donor advised funds generally do not qualify.
Q: Are business donations deducted on my personal return?
A: If your business is an LLC taxed as a partnership or an S corporation, charitable gifts made by the business usually pass through to your personal return.
Sources: IRS Topic 506 Charitable Contributions, IRS Working Families Tax Cuts page, IRS Publication 505 (2026), IRS Tips for Tracking Charitable Donations
