When the Tax Break Shrinks, Does Generosity? A Christian's Answer for 2026
In 2018 the country ran an accidental experiment on whether the tax code makes people generous, and the results are worth knowing before you decide what to give this year.
The 2017 tax law roughly doubled the standard deduction and capped the state and local tax deduction at $10,000. The effect was not subtle. About one in five households stopped itemizing, which meant they no longer received any federal tax benefit for a charitable gift. Research published by the National Bureau of Economic Research found that those households cut their giving by roughly $880 each, and that the change pulled about $20 billion a year out of the nonprofit sector. Tax policy, the economists concluded, really does move money.
Then there is the part of that study that rarely gets quoted. The drop was not evenly distributed. According to the Notre Dame economist who led the work, the reform caused little change in giving to religious congregations — churches, synagogues, mosques, and broadcast ministries. The $20 billion came almost entirely out of everything else: food banks, arts organizations, conservation groups, human services.
Same taxpayers. Same lost deduction. Two very different responses.
What that gap actually measures
It would be easy to read that as a compliment to churchgoers, and that is not quite what it says. What it measures is where the gift was coming from in the first place.
Giving that is priced — giving that exists partly because the deduction makes it cheaper — moves when the price moves. Giving that comes from a commitment made somewhere other than the tax return does not. A household that tithes has already decided the number before it ever opens tax software. The deduction was never the reason; it was a discount applied afterward to a decision that had already been made.
The same study found a second behavior worth noting. Donors who saw the change coming re-timed their gifts, pulling donations forward into the fourth quarter of 2017 to claim them under the old rules before the new ones took effect. That is not a lapse in conviction. It is what a careful person does when the price of something is about to change and the timing is within their control. The giving still happened; it simply happened on a calendar that accounted for the law.
That is close to what Scripture keeps pointing at. Paul's instruction to the Corinthians locates the whole thing upstream of the transaction: "Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver" (2 Corinthians 9:7, ESV). Jesus was blunter, and aimed at motive rather than amount, warning against giving "to be seen by others" and telling his hearers not to let the left hand know what the right hand is doing (Matthew 6:1–4, ESV). Neither passage says anything about whether the gift is deductible. Both assume the decision was settled before the money moved.
So the honest answer to the question in the title is that it depends entirely on what the deduction was doing for you. If it was the reason, a smaller deduction produces a smaller gift, and the 2018 numbers show exactly how much smaller. If it was a discount on a decision you had already made, the new rules change your tax bill and leave your giving alone.
What actually changed for 2026
Worth being precise here, because the changes cut in different directions depending on who you are.
Donors who itemize now face a floor. The first 0.5% of adjusted gross income in charitable gifts produces no deduction at all — a rule that falls hardest on people who give steadily every year rather than in occasional large gifts. Amounts pushed below the floor are not lost forever; they carry forward for up to five years. They are simply not deductible now.
Top-bracket donors face a second limit stacked on the first. The value of an itemized deduction is capped at 35% even for taxpayers in the 37% bracket. Put the floor and the cap together and the arithmetic on an unchanged gift looks like this.
Meanwhile, the door opened for everyone else. A permanent above-the-line deduction now lets non-itemizers deduct charitable gifts — $1,000 for a single filer and $2,000 for a couple filing jointly — the first federal giving incentive most households have had since 2021. For the roughly nine in ten taxpayers who take the standard deduction, the incentive went up, not down.
That is an unusual shape for a tax change. The incentive shrank at the top of the income scale and grew at the bottom. Which means the congregation that gave steadily through 2018 without flinching is, on balance, being asked to absorb less of this one than its largest donors are.
The floor, the cap, and the new above-the-line deduction interact differently depending on your income, your bracket, and how much you have already given this year. Those are not questions a general article can settle.
Want to see what this looks like with your actual numbers? Book a Clarity Call — 30 minutes, no pitch.
Faithful giving still has arithmetic in it
There is a version of this conversation that ends with a shrug — the deduction was never the point, so ignore the rules and carry on. That is half right and it costs real money.
The parable of the talents does not commend the servant who was careless with what he was handed. It commends the ones who took what belonged to their master and put it to work. Holding wealth loosely and handling it carelessly are different things, and Scripture is notably unbothered by careful stewardship. Every dollar that clears the floor instead of falling under it is a dollar that reaches the church rather than the Treasury. That is not tax avoidance dressed up in spiritual language. It is the same instinct that makes a family compare grocery prices, applied to the largest voluntary transfer most households make in a year.
In practice, that means a few things are now worth doing deliberately:
- Stop spreading gifts thin across years without thinking about it. The floor penalizes the steady annual giver specifically. Concentrating several years of giving into one tax year clears the floor once instead of losing a slice of it every year, and a donor advised fund lets the church still receive its money on the old rhythm. - Give appreciated assets instead of cash where you hold them. Donating stock held more than a year avoids capital gains tax entirely, which is a benefit the floor and the cap do not touch. - Use the IRA if you are over 70½. A qualified charitable distribution never enters adjusted gross income at all, so no floor applies and no cap applies. - If you take the standard deduction, claim the new above-the-line amount. Roughly $1,000 or $2,000 of what you were already giving now reduces your taxable income. Most people who qualify will not hear about it from anyone.
None of that changes the number in your heart. It changes how much of that number survives the trip.
The question worth asking before December
Here is a test that takes about a minute. Look at what you gave last year. Then ask what you would have given if none of it had been deductible at all.
If the two numbers are close, the 2026 rules are a bookkeeping problem and you should solve them efficiently. If they are far apart, that gap is worth sitting with honestly and without self-flagellation — it is simply information about where the decision was being made.
The same test works on a household's future giving, and it is more useful there. A pledge to a building campaign, a commitment to a mission organization, a plan to leave something behind at the end — those are the gifts most likely to be quietly resized when the deduction moves, because they are the ones still being decided. Making the decision first, and then asking how to structure it, puts the two steps in the order Scripture assumes they come in.
The broader data suggests most religious giving sits in the first category and is holding, though not growing. Giving USA reported that Americans gave $617.20 billion in 2025, the first year giving crossed $600 billion, with religion receiving $151.58 billion of it. Religion was also the one major sector that did not outpace inflation, growing 2.4% in current dollars and slipping slightly after adjustment. Steady, in other words, and quietly losing ground to prices.
Which leaves the question where it has always been. Congress can raise the price of a gift or lower it, and the evidence says that moves roughly $20 billion a year one way or the other. What Congress cannot do is decide what the gift was for. That was settled before the return was filed, and it will be settled again this year by people who mostly will not notice the rules changed.
What a shrinking deduction costs your household depends on your bracket, your assets, and the giving you have already committed to. The conversations that move people from "interesting article" to "actual decision" happen one-on-one, with real numbers on the table.
Book a Clarity Call — 30 minutes with a Partner. No pitch. No homework.
Luke Lyles is a Partner at Sage & Main who works with business owners, families, and their advisors to turn intentions on paper into plans that are actually funded.
Comments