Floor to Ceiling: Three Factors That Will Influence Corporate Giving Now and Later

At The Community Foundation, we work with business owners to structure charitable giving plans that achieve the company’s goals for its employees and the community. For your clients that run a business, here are some of the changes to the charitable deduction rules that apply to corporations.  

A new “floor” on the deductibility of charitable donations is coming in 2026.

Starting in 2026, corporations can only deduct charitable contributions that exceed 1% of their taxable income. Donations below that threshold won’t be deductible at all. This means, for example, that a company with $1 million in taxable income must give more than $10,000 to take a charitable deduction — and even then, only donations above that $10,000 are eligible for a charitable deduction.  

The “ceiling” stays in place — and it’s trickier.

The IRS’s ceiling on charitable deductions — allowing corporations to deduct up to 10% of taxable income — still applies. Starting in 2026, both the new 1% floor and the existing 10% ceiling will apply simultaneously. This means only amounts exceeding the 1% floor and up to the 10% ceiling are deductible. Both categories of “disallowed” giving can be carried forward for up to five years but can only be deducted in a carryforward year if total giving  exceeds the 1% floor and doesn’t exceed the 10% cap for that year.  

So what now? Don’t wait to address this issue.

Your clients may want to increase their charitable giving in 2025 before the higher limits kick in.  A Donor Advised Fund at The Community Foundation may be a solution if your client wants to “bunch” planned gifts for this and future years in 2025 to distribute over time.  Please reach out to The Community Foundation if a corporate Donor Advised Fund — or any other charitable gift — makes sense for your clients.  I look forward to speaking with you!