Starting in 2026, the OBBBA makes only corporate charitable contributions above 1% of taxable income eligible for deduction, while the long-standing 10% income cap still applies.
A corporation with $1 million in taxable income and $170,000 in gifts can deduct only $100,000 this year; the remaining $70,000 carries forward but faces the same floor and cap again.
Pass-through entities face more uneven results because deductions flow to owners: a 50% LLC owner allocated $10,000 could deduct just $1,000 if taking the standard deduction, while an itemizing owner faces a 0.5% AGI floor.
Businesses may preserve full deductibility by treating qualifying payments to charities as Section 162 business expenses rather than Section 170 gifts, but only if they can show a direct business link, expected financial return and contemporaneous documentation.
The changes extend the OBBBA's broader 2026 crackdown on charitable deductions, raising the cost of business giving and pushing owners to restructure payment programs before year-end.