Tax Law Changes May Boost Donors but Reduce Nonprofit Donations

New research finds tax law revisions will encourage more Americans to give, but total donations may decline

Mar. 17, 2026 at 4:09pm

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According to a new report 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 projected to drop by around $5.6 billion annually due to new rules affecting corporations and the wealthiest donors.

Why it matters

The findings highlight the outsized impact that the largest donors and corporations have on overall charitable giving trends. While the new tax deductions may encourage more Americans to donate, reductions in giving from the wealthiest individuals and corporations are expected to outweigh those gains, potentially putting financial strain on nonprofits.

The details

The main change that will encourage 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. However, two changes will likely drive down donations from the wealthiest donors: a lower cap on the overall deductions the wealthiest can claim, and a new floor requiring itemized donors to give more than 0.5% of their income to nonprofits to claim a tax benefit. Additionally, a new 1% floor on corporate charitable donations will reduce giving from companies that previously gave less.

  • The tax law changes were passed by Congress in the summer of 2025.
  • The research projections reflect the expected impact in 2026.

The players

Indiana University Lilly Family School of Philanthropy

A research institution that studies charitable giving and the nonprofit sector.

Jon Bergdoll

Interim director of data and research partnerships at the Indiana University Lilly Family School of Philanthropy and lead researcher on the 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 and nonprofits will continue to monitor the impact of the tax law changes on charitable giving over the coming years to better understand the long-term effects.

The takeaway

While the new tax deductions may encourage more Americans to donate, the overall decline in giving from the wealthiest individuals and corporations is expected to outweigh those gains, potentially putting financial strain on nonprofits that rely heavily on major donors and corporate support.