Tax Law Changes Likely to Increase Donors but Reduce Donations to Nonprofits

New research finds tax law changes will encourage more Americans to donate, but overall giving may drop by up to $12 billion annually.

Mar. 17, 2026 at 5:18pm

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According to new research from the Indiana University Lilly Family School of Philanthropy, changes to the tax law passed by Congress last summer will likely increase the number of Americans who donate to nonprofits by 6 to 8.7 million. However, the overall amount donated to charity is expected to drop by around $5.6 billion annually due to new rules affecting corporations and the wealthiest donors.

Why it matters

The report highlights how "top heavy" charitable giving is, with the largest donors and corporations having an outsized impact on overall giving trends. The changes in the tax law are expected to have a significant effect, even if they represent a small percentage of the total amount donated annually.

The details

The main change encouraging more people to donate is a new charitable deduction of up to $1,000 for individuals and $2,000 for married couples that the vast majority of people can claim, even if they take the standard deduction. However, two changes will likely drive down donations from the wealthiest donors - a lower cap on the overall deductions they can claim, and a new floor requiring them to give more than 0.5% of their income to nonprofits to claim a tax benefit. The law also puts a new 1% floor on corporate charitable donations.

  • The tax law changes were passed by Congress last summer.
  • Researchers expect the full impact of the changes to take time, as it may take a while for people to become aware of the new deduction.

The players

Indiana University Lilly Family School of Philanthropy

A research institution that studies charitable giving and philanthropy.

Jon Bergdoll

Interim director of data and research partnerships at the Indiana University Lilly Family School of Philanthropy, and the lead researcher on this study.

Sheila Bravo

President and CEO of the Delaware Alliance for Nonprofit Advancement, which supports and advocates for nonprofits in the state.

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What they’re saying

“Giving I could imagine going in so many different directions this year. And so this is not saying, 'Giving will absolutely go down in 2026.' It just there's this little extra weight dragging it down.”

— Jon Bergdoll, Interim director of data and research partnerships, Indiana University Lilly Family School of Philanthropy

“Here in Delaware, the shifts that we're seeing in corporate giving are not specific to that tax law as much as there's other factors that are influencing corporate giving.”

— Sheila Bravo, President and CEO, Delaware Alliance for Nonprofit Advancement

What’s next

Researchers say it will take time for the full impact of the tax law changes to be felt, as it may take a while for people to become aware of the new charitable deduction. Nonprofits will likely need to take an active role in educating the public about the changes in order to encourage more donations.

The takeaway

The report highlights the outsized influence of the largest donors and corporations on overall charitable giving trends. While the tax law changes may increase the number of donors, the reduction in giving from the wealthiest individuals and corporations could have a significant impact on the total amount donated to nonprofits annually.