Income Taxes Update from Gregg The Tax Guy
Looking Towards 2027 Tax Preparation
A New Tax Break for Charitable Donations in 2026
There is an important tax change this year for people who make charitable donations but normally take the standard deduction.
Beginning with the 2026 tax year, taxpayers who take the standard deduction can deduct up to $1,000 in qualifying monetary charitable contributions, or up to $2,000 for married couples filing jointly.
This means you may be able to receive a tax benefit for charitable giving without itemizing your deductions.
Qualifying contributions can include donations made by cash, check, credit card, debit card, or electronic payment to an eligible charitable organization.
There are a few things to keep in mind:
The donation must generally be made to a qualified charitable organization. Money given directly to an individual or family generally does not qualify.
Donations of clothing, furniture, household goods, and other property do not count toward this particular deduction.
Keep your receipts and records. If you donate throughout the year, start keeping track now rather than trying to reconstruct everything at tax time.
If you regularly donate to your church, nonprofit organizations, food banks, animal shelters, veterans organizations, or other charities, 2026 is a year when keeping track of those contributions could directly reduce your federal taxable income even if you don't itemize.
One wording change I'd definitely make to your original: don't call it a “special deduction.” I'd describe it as a new deduction available to non-itemizers. That's more informative and less likely to make clients think this is some sort of separate credit where a $1,000 donation means $1,000 comes off their tax bill.
We could also add a simple example, such as “If a married couple taking the standard deduction gives $2,000 to their church during 2026, they may be able to deduct that $2,000 in addition to their standard deduction.” That would make the benefit immediately understandable.
A major improvement to the Child and Dependent Care Credit. This one is particularly good for families. For 2026, the maximum credit percentage increases from 35% to 50% of qualifying expenses. The expense limits remain $3,000 for one qualifying person and $6,000 for two or more. That means some families could see a substantially larger credit.
“No tax on overtime” continues for 2026. The name is misleading because not all overtime becomes tax-free. The deduction generally applies to the premium portion of qualifying FLSA overtime, such as the extra half of time-and-a-half. The maximum deduction is $12,500, or $25,000 MFJ, subject to income limits.
“No tax on tips” continues. Qualified workers can potentially deduct up to $25,000 of qualified tips, subject to occupation, reporting and income requirements. This could be a very useful email because people hear “no tax on tips” and assume every dollar of tips is automatically tax-free. It isn't.
Car-loan interest can be deductible. Up to $10,000 of qualifying interest can potentially be deducted even by someone taking the standard deduction. But there are significant restrictions: generally a new vehicle, a qualifying loan originated after December 31, 2024, personal use, income limitations, and other requirements. Used vehicles and leases don't qualify.
The additional senior deduction continues. Someone age 65 or older can potentially receive an additional $6,000 deduction per qualifying person, meaning as much as $12,000 for a qualifying married couple. It is separate from the traditional additional standard deduction for age 65+, although income phaseouts apply.
The standard deduction is increasing again for 2026. It's $16,100 Single/MFS, $24,150 Head of Household and $32,200 MFJ.
Gregg Katz
913-280-3266
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