This article gives general information on the federal income tax deduction for charitable contributions by C corporations (section 170 of the Internal Revenue Code, as amended by the One Big Beautiful Bill Act of 2025) as we understand it in October 2026. It is not tax advice. State rules differ, and the IRS may publish further guidance; check how the rules apply to your company with your tax adviser.
No federal law makes a company spend on CSR, but most large US companies give to nonprofits every year, and the tax code has long let a corporation deduct those gifts up to 10% of its taxable income. From 2026 there is also a floor. The One Big Beautiful Bill Act, signed on July 4, 2025, changed section 170(b)(2) so that, for tax years beginning after December 31, 2025, a corporation deducts its charitable contributions only to the extent they exceed 1% of its taxable income. For a company that gives steadily every year, part of each year's giving now brings no deduction at all. That makes good records more valuable, not less.
How the floor and the ceiling work together
- Taxable income first: both limits are worked out on taxable income before the charitable deduction (and before a few other items, such as the dividends-received deduction and loss carrybacks).
- The 1% floor: contributions up to 1% of that taxable income are not deductible.
- The 10% ceiling: the deduction still can't exceed 10% of taxable income, so the most a corporation can deduct in a year is the slice between 1% and 10%.
- Over the ceiling: contributions above 10% carry forward for up to five years, as before.
- Under the floor: the amount disallowed by the floor carries forward only in a year when contributions also exceed the 10% ceiling. In the usual case, where a company gives less than 10% of taxable income, the amount under the floor is simply lost.
The rules in this article are for C corporations. S corporations and partnerships pass contributions through to their owners, and individuals who itemize face their own, different floor from 2026.
What counts as a contribution
- To a qualified organization: in practice, mostly 501(c)(3) public charities and government units such as a city parks department or a public school district, when the gift is for public purposes. Check each organization in the IRS Tax Exempt Organization Search and record its EIN and status.
- Paid in the tax year: contributions count in the year they are paid. An accrual-basis corporation can elect to treat a contribution its board authorized during the year as paid that year if it is paid by the 15th day of the fourth month after year end; ask your adviser before relying on it.
- Not sponsorship: when your company gets advertising or another real benefit in return, the payment is generally not a charitable contribution. It may be deductible as a business expense instead, outside the 1% and 10% limits.
- Not volunteer time: the value of employees' volunteer hours is never deductible as a contribution, though it is worth reporting as community investment.
- Non-cash gifts at the right value: donated equipment or products are generally deductible at no more than their cost to the company, with special rules for some inventory given to care for people in need.
The paperwork the IRS asks for
- $250 or more: a contemporaneous written acknowledgment from the charity, received by the time you file the return, stating the amount (or describing the property) and whether you received anything in return. A canceled check is not enough.
- Non-cash gifts over $5,000: generally a qualified appraisal and Form 8283 Section B with the return. Some property, such as publicly traded securities and inventory, has its own rules, so check each gift with your adviser.
- Each organization: its legal name and EIN, its 501(c)(3) determination and, if you fund it every year, a note of when you last checked it.
An illustrative example
Take a company with a calendar tax year and taxable income of $48,000,000 before the charitable deduction in 2026. Its floor is $480,000 and its ceiling $4,800,000. By December its records show:
- $1,260,000 paid to 501(c)(3) public charities and a city parks department, all with their EIN and status on file. This is the figure that counts.
- $25,000 to a youth coding program whose 501(c)(3) status hasn't been checked. It doesn't count until it is.
- $50,000 to sponsor a hospice gala, with the company's name on the stage and a table for clients. That is sponsorship, not a contribution.
- 4,600 volunteer hours. Worth reporting, never deductible.
Deductible: $1,260,000 less the $480,000 floor, or $780,000. Because the company is far below its $4,800,000 ceiling, the $480,000 under the floor does not carry forward. Before 2026 the same giving would have been fully deductible. Two items still need paperwork before filing: a $40,000 gift without a written acknowledgment on file, and $36,000 of donated laptops that need an appraisal. The figures are invented to show the method; your tax adviser confirms the treatment.
What companies are looking at
Some companies are reviewing the timing of their giving, for example concentrating several years' planned grants into one year so that less of the total falls under the floor, or giving through a company foundation or a donor-advised fund. Others are separating sponsorship and marketing spending more carefully, since it sits outside the limits. These are decisions for your finance and tax teams; the common thread is that they all need a clean record of what was paid, when, to whom, and on what terms.
Doing it in CorpHands
Record each nonprofit's EIN and 501(c)(3) status after checking the IRS search, mark government partners as government bodies, and mark each payment in the budget as a donation or sponsorship, cash or in-kind, with the charity's receipt number or the acknowledgment uploaded. Set the fiscal year to match your tax year. On the Giving and tax page, enter taxable income before the charitable deduction: CorpHands shows the 1% floor, the 10% ceiling, the contributions to qualified organizations, the estimated deduction, any amount carried forward and the amount under the floor that is not deductible. It lists the records to check: contributions to organizations without an EIN and 501(c)(3) status, gifts of $250 or more without an acknowledgment, and non-cash gifts over $5,000. Carryovers from earlier years are not included. Download the CSV or the US report pack for your adviser. See how it works.