In India's new tax regime (as of 2025-2026), donations to charitable institutions are generally not tax-deductible. Unlike the old regime, which allowed deductions under Section 80G, the new regime focuses on lower tax rates, removing most deductions, including for donations.
Is donation allowed in the new tax regime? No, taxpayers cannot claim Section 80G deductions for donations under the new tax regime. This means your donations still help causes, but will not reduce your taxes if you choose this regime.
New charitable deduction rules, primarily from the "One Big Beautiful Bill Act" (OBBBA), take effect in 2026, introducing a 0.5% AGI floor for itemizers, reducing top-bracket tax breaks to a 35% benefit, and offering a new above-the-line deduction for non-itemizers (up to $1k/$2k), while also making the 60% AGI limit for cash gifts permanent. These changes create new planning opportunities, like bunching donations in 2025 to avoid the new floor.
90% of taxpayers use the standard deduction, but now in 2026, the non-itemizers are able to get a tax deduction for the charitable gifts. Up to $1,000 on single returns, up to $2,000 on married joint returns. To qualify for this non-itemizer charitable deduction, you have to make a cash gift – cash or credit card.
The $600 charitable deduction for non-itemizers (originally $300 for individuals, $600 for joint filers in 2020-2021) was a temporary COVID-era rule that expired at the end of 2021, but it's being reinstated and increased starting in 2026 under new legislation, allowing up to a $1,000 deduction ($2,000 joint) for cash gifts even if you take the standard deduction, though it doesn't reduce your AGI.
Starting in 2026, the One Big Beautiful Bill Act (OBBBA) introduces a new $2,000 charitable deduction for non-itemizers (up to $1,000 for singles) on cash gifts to qualified charities, providing a tax break for the majority of Americans, while itemizers face a new 0.5% AGI floor, meaning only contributions exceeding that threshold are deductible, making strategic giving in 2025 important for some.
The One Big Beautiful Bill Act includes a game-changing shift in how charitable contributions are treated for both itemizers and non-itemizers. For the first time in years, starting in 2026 non-itemizers can claim a charitable deduction: up to $1,000 for single filers or $2,000 for married couples filing jointly.
100% Deduction (No Limit) – Donations to funds like the National Defense Fund, Prime Minister's National Relief Fund, National Foundation for Communal Harmony, and National/State Blood Transfusion Council qualify for a full 100% tax deduction without any limit.
A new charitable deduction for non-itemizers
Starting in 2026, taxpayers who take the standard deduction can also claim a new above-the-line charitable deduction: up to $1,000 for single filers and $2,000 for joint filers. This deduction applies only to cash donations made directly to qualified charities.
You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. Generally, you may deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases.
The tax deduction benefits can also be availed by donating to multiple political parties rather than only one. This deduction can only be claimed under the old tax regime and not under the new tax regime.
Starting in 2026, charitable deductions for itemizers will be subject to a floor; they will be allowed only to the extent that total charitable contributions exceed 0.5% of adjusted gross income (AGI).
Donations to the National Government (including its agencies and instrumentalities) and to qualified non-profit institutions, subject to certain documentary and registration requirements, are fully exempt from donor's tax. (These are not “relatives” per se, but are among the recognized exceptions.)
No, under the new tax regime, taxpayers cannot claim deductions under Section 80G for donations. This means that while your donations still make a difference, they won't contribute to tax savings if you opt for the new tax regime.
A simple strategy for boosting your donation—and your tax deduction—is to give stocks, bonds or other appreciated securities directly to the charity of your choice. Simply writing a check or giving via credit card may be quick and easy, but it tends to be less tax-efficient than giving appreciated investments.
Yes, you can give your daughter $100,000 to buy a house, but you'll need proper documentation for her mortgage lender and you'll likely need to file a gift tax return (IRS Form 709) because the amount exceeds the annual exclusion, though it won't usually result in taxes unless you've used up your large lifetime exemption. Lenders require gift letters proving the funds aren't a loan, and you can avoid gift tax impact by gifting up to the annual limit ($19,000 per person in 2025) each year or by using your substantial lifetime exemption.
Step-Up in Basis for Inherited Assets
One tax advantage of leaving assets after death is the step-up in basis. This provision allows heirs to inherit assets at their fair market value at the time of death, effectively resetting the capital gains tax to zero for any appreciation during the decedent's lifetime.
Yes, you can give your son $100,000 tax-free in 2025 by utilizing the annual gift tax exclusion and your lifetime exemption, but you'll need to report the gift to the IRS on Form 709 since it exceeds the $19,000 annual limit, though you won't pay tax unless you exceed your much larger $13.99 million lifetime gift/estate tax exemption. The gift is considered yours (the giver) for tax purposes, not your son's.
But starting in 2026, the OBBBA reinstates the COVID-era deduction for cash donations by nonitemizers, subject to an increased annual limit of $1,000, or $2,000 for joint filers. (The limits were $300 and $600, respectively, for 2021 when this nonitemizer deduction was last available.)
If you itemize deductions on your federal tax return, you may be entitled to claim a charitable deduction for your Goodwill donations. According to the Internal Revenue Service (IRS), a taxpayer can deduct the fair market value of clothing, household goods, used furniture, shoes, books and so forth.