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Question

How does the 35% cap on itemized deductions work?

Answer

For taxpayers in the 37% marginal bracket, the One Big Beautiful Bill Act limits the tax benefit of all itemized deductions — including charitable gifts — to the equivalent of a 35% rate. A dollar of deduction is worth 35 cents instead of 37, which modestly raises the after-tax cost of large gifts for top-bracket donors.

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Tax Planning Financial Planning Charitable Giving Impact of New Laws Tax Basics Tax Tips & Tricks OBBBA Protecting Your Legacy Year-Round Tax Planning FAQs
Last Updated Sept. 8, 2026
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