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I’m hoping Bill Perry and/or one of our other tax experts can answer this.
For tax year 2026, non-itemizers can deduct charitable contributions of up to $1000 (single) or $2000 (married). What I’m trying to understand is whether this deduction is taken before figuring AGI (Adjusted Gross Income) or after. I just did a quick web search and got conflicting answers—even from apparently knowledgeable sources.
Why worry about it long before we’re doing our 2026 taxes? Because every fall I try to estimate what our taxable income will be for the year so as to know how much in QCDs (Qualified Charitable Donations) I should make from our RMD so as to reduce income enough to avoid an IRMAA cliff and/or a higher marginal tax bracket. I imagine there are other HDers who do the same.
Many thanks to anyone who knows the definitive answer.
My research show this: This deduction is taken before above-the-line deduction. I believe this to be correct based on Gemini. Do not be afraid to ask tax questions of Gemini. I make my calculations generally in Nov when I take my RMD to insure I pay the correct Fed and State taxes to avoid penalties, and try to keep all items like IRMMA to the max without going to the next higher level. I developed a spreadsheet which reflects how I use the tax forms, and that works for me.
William, you might want to check the comments below, including Bill Perry’s link to the draft 2026 1040. It has line 12f showing this deduction is anticipated to be below-the-line (after AGI is calculated).
You used to be able to classify tax deductions as “above the line” meaning before AGI or “below the line” meaning you had to itemize using Schedule A, instead of taking the standard deduction.
Now we have a third category, where certain items are deducted “below the line” but they are not reported on Schedule A (this includes the senior deduction for 2025-2028 and the cash charity deduction starting with tax year 2026).
In 2023, approximately 89.2% of taxpayers (generally low- and middle-income taxpayers) claimed the standard deduction, while 9.4% (generally high-income taxpayers) claimed itemized deductions per final government information.
The final percentages of those itemizing for tax years 2024 and 2025 are not yet available but are expected to be similar to the 2023.
For the vast majority of taxpayers the effect of our current income tax laws means financial decisions that involve considering their tax impact are most beneficial to those whose actions result in either an exclusion from taxable income (above the line like a qualified charitable distribution) or a deduction below the line that is available even when you do not itemize.
Taxpayers who still itemize their deductions may only be partially benefiting as the additional benefit from itemized deductions is best measured by the extent that the itemized deductions exceed their available standard deduction times their marginal tax rate. Sometimes for taxes the how you do something is more important than the why you do it.
While I understand your desire to max out AGI/MAGI up to the various bracket limits, if we’re only talking about $1k or $2k for the non-itemizers, seems to me like that’s trying to run a little too close to the wind.
And anyway, IRMAA is based on MAGI so I don’t think the answer to this question affects that.
In any case, I’ve just gone through my tax planning for the year and I’m leaving myself a healthy amount of leeway on my calculations in case dividends or interest come in a bit more than I expected.
I agree that you have to have an ample cushion when figuring this. My goal is to calculate as closely as I can what our income for the year will be. Then I add a substantial cushion to protect against that unexpected additional income you mention.
You’re right that IRMAA is based on MAGI, but we don’t have any amounts (e.g., tax-exempt interest) to add back to AGI to arrive at MAGI, so they’re the same for us.
In any event, I could’ve framed the question in terms of MAGI instead of AGI, but it wouldn’t affect the answer. If the non-itemizer charitable deduction is “above the line,” it reduces AGI, which can then be adjusted, if necessary, to arrive at MAGI. If it’s “below the line,” then it doesn’t reduce either one.
Hope that makes sense.
I agree with Rick and the conclusion that for a non itemized return the $1K/$2K (single / MFJ) 2026 charitable deduction is below the line. That is how I currently have the expense in our 2026 planned return.
Here is a link to the IRS draft of the 2026 form 1040. The line 12f currently shows the IRS’s thinking is that deduction is below the line.
I got this from a search of the IRS website…
”Beginning with tax year 2026, if you do not itemize, you may deduct up to $1,000 ($2,000 if filing jointly) of your cash contributions to certain qualified organizations.”
Thanks Bill. I knew you would find an IRS source. It is surprising that the AARP and Dinkytown calculators treat this differently. I thought AARP was based on the Dinkytown tool, but maybe they are out of sync.
Doing a right click on the AARP website 1040 calculator I see “KJE” the computer company everywhere in the code which is the company that developed, maintains and leases the Dinkytown 1040 tool. I think I remember in the past a disappearing popup on the AARP tool stating that Dinkytown was the source but I no longer find that reference.
I know just enough about coding to be dangerous. I hope Dinkytown will be around as long as I am around.
I agree they are likely just different versions of the same software.
Bill, thanks for your take and the very helpful link.
The draft 2026 form1040, line 12f, seems to nail it. I’m supposing there’s scant chance the final version would be any different.
On the non itemized charitable deduction I do not expect any change on the final form compared with the current draft form. Given that we have a midterm national election before the end of the year and then a congress with lame duck representatives changes are always possible that could cause form changes. For the sake of certainty I hope the final version of the 2026 1040 is available in a timely manner so that all of us, taxpayers, tax preparers, tax software developers and the Internal Revenue Service can do our own part in this complex system.
It will be interesting to see how this change impacts tax preparation for 2026. For years we have been telling people that their itemized deductions are less than the larger standard. Last year at AARP we made an effort to alert folks that this new deduction was coming, and to save their receipts.
I worked in a college’s development office and was tasked with tracking the evolution of OBBBA as “the sausage was being made.” The original Senate version of the legislation treated the charitable deduction as an “above-the-line” deduction, thus reducing AGI, but the House version treated it as a below-the-line deduction, like the senior deduction, so it didn’t affect AGI. The final passage of OBBA included the House’s version.
This is the interpretation that was presented to us..”
However, this new deduction is somewhat unusual: it is widely described as “above the line”, but under the One Big Beautiful Bill Act it does not reduce AGI itself; it reduces taxable income after AGI is calculated, functioning like a universal charitable deduction layered on top of the standard deduction.”
Bill, Considering the last sentence in your post, only congress is capable of coming up with such complicated, convoluted thinking.
Thanks, Bill, very helpful. Taken with Bill Perry’s post above, I think we have the answer.
Andrew. I just ran a scenario on the Dinkytown 1040 calculator with and without the $2,000 charitable deduction. The charitable deduction was treated like the new senior deception. it reduced taxable income by $2,000 but did not reduce AGI. I then ran the same case using AARP’s 1040 calculator and they reduced both AGI and taxable income. They calculated the same tax due, both with and without the charitable contribution. I agree there is confusing info out there.
Good typo there, Rick. The senior deception was touted as no tax on Social Security.
Randy. That’s funny. I had t noticed it. Darn auto-correct!
Claude ai agrees with Dinkytown and said it does not impact AGI. Claude also says there is confusing info sources out there that incorrectly state it reduces AGI. I could not find an authoritative IRS source. I guess for now I would assume it does not reduce AGI, but keep checking.
Rick, thanks very much for doing all that. There really is a bunch of confusing and contradictory info. out there on this.
I agree—till the issue is settled, I’ll assume it doesn’t reduce AGI.
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