Floor to Ceiling: Four Factors That Will Influence Corporate Giving

At the Community Foundation, we work with business leaders and owners to design charitable giving plans that meet their goals for employees and the community. Many corporate giving strategies involve donating to local charities, either directly or through a corporate fund at the Community Foundation.

If you run a business, you may be aware of upcoming changes to the charitable deduction rules for corporations. Here is what you need to know.

A New Floor on Deductibility Starts in 2026

Starting in 2026, corporations can only deduct charitable contributions that exceed 1% of their taxable income. Contributions below this threshold will not be deductible. For example, a company with $100 million in taxable income must give more than $1 million to claim a deduction, and even then, only the amount above $1 million is eligible. Many business leaders worry this change will reduce corporate giving, which reached record levels last year.

The Ceiling Remains in Place

The IRS’s ceiling on corporate charitable deductions, allowing deductions of up to 10% of taxable income, still applies. Beginning in 2026, both the new 1% floor and the 10% ceiling will apply at the same time, making the rules more complex. Only donations exceeding the 1% floor and up to the 10% ceiling will be deductible. Contributions that are not currently deductible can be carried forward for up to five years. In a carryforward year, the donation can only be deducted if the total giving for that year exceeds the 1% floor, and the carried-forward portion combined with current-year giving does not exceed the 10% cap.

What You Should Do Now

Don’t wait to address this issue.
Act quickly to evaluate your company’s giving strategies for the remainder of 2025 and beyond. The Community Foundation can help you explore how a corporate donor-advised fund can maximize deductions before the new floor takes effect.

Consider sponsorship opportunities.
Charity sponsorships can still be deducted as marketing expenses if the payment provides a direct business benefit, such as advertising. Under IRS rules, your business will need to document the benefit received. Likewise, the charities you support must account for the contributions properly, including whether any portion should be reported as unrelated taxable income.

The Community Foundation team is here to help you navigate these changes and develop strategies that maximize impact for both your company and the community. Please reach out to us anytime.