1-Percent Floor on Deduction of Charitable Contributions Made by Corporations
Section 70426 · Sec. 70426 ·
What this chapter is about
This part puts a floor under the charity deduction for corporations. Only gifts above 1 percent of taxable income count. The ceiling stays at 10 percent. Blocked gifts may be carried forward for five years.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70426 in the PDF
What the document says
“exceeds 1 percent of the taxpayer's taxable income for the taxable year, and”
The section rewrites section 170(b)(2)(A) of the Internal Revenue Code of 1986 so that a charitable contribution other than one covered by subparagraph (B) or (C) is deductible only so far as the total of such contributions exceeds 1 percent of taxable income for the year and does not exceed 10 percent of taxable income for the year.
What the document actually says
“exceeds 1 percent of the taxpayer's taxable income for the taxable year, and”
That sentence, in plain words
The total of the gifts must top 1 percent of taxable income. That is the floor.
What this is about
A ceiling of 10 percent also applies. So only the band between the two counts. Gifts below the floor get no deduction.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70426 in the PDF
What the document says
“Any charitable contribution taken into account under subsection (b)(2)(A) for any taxable year which is not allowed as a deduction by reason of clause (ii) thereof shall be taken into account as a charitable contribution for the succeeding taxable year”
The section rewrites section 170(d)(2) of the Internal Revenue Code of 1986 so that a contribution blocked by the 10 percent ceiling counts as a contribution for the next taxable year, with that year's own contributions counted first. Where a year already carries a contribution forward, the rule is read as covering amounts blocked by the floor as well as by the ceiling.
What the document actually says
“Any charitable contribution taken into account under subsection (b)(2)(A) for any taxable year which is not allowed as a deduction by reason of clause (ii) thereof shall be taken into account as a charitable contribution for the succeeding taxable year”
That sentence, in plain words
A gift blocked by the ceiling is not lost. It counts as a gift for the next tax year.
What this is about
That year's own gifts are counted first. Only then does the carried gift get its turn. The floor is treated the same way in some years.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “may not”Who acts: Secretary of the TreasuryHow: statuteSec. 70426 in the PDF
What the document says
“No charitable contribution may be carried forward under subparagraph (A) to any taxable year following the fifth taxable year after the taxable year in which the charitable contribution was first taken into account.”
The section bars a carryforward past the fifth taxable year after the year the contribution was first taken into account, with contributions treated as allowed on a first in first out basis. It also cuts the amount carried forward so far as it would reduce taxable income as computed for the second sentence of section 172(b)(2) and increase a net operating loss carryover.
What the document actually says
“No charitable contribution may be carried forward under subparagraph (A) to any taxable year following the fifth taxable year after the taxable year in which the charitable contribution was first taken into account.”
That sentence, in plain words
A gift may not be carried past a point. That point is the fifth tax year after it was first counted.
What this is about
Older gifts are used first. After five years the rest is lost. A special rule keeps it from building a loss carryover.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall apply”Who acts: Secretary of the TreasuryHow: statuteSec. 70426 in the PDF
What the document says
“The amendments made by this section shall apply to taxable years beginning after December 31, 2025.”
The section applies its amendments to taxable years beginning after December 31, 2025.
What the document actually says
“The amendments made by this section shall apply to taxable years beginning after December 31, 2025.”
That sentence, in plain words
The changes start with tax years that begin after December 31, 2025.
What this is about
Earlier tax years are not touched. The old rules still hold for them. The date is fixed in the law.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
Each distinct thing the section does: create the 1 percent floor alongside the 10 percent ceiling, allow the carryforward of amounts blocked by the ceiling, cap that carryforward at five taxable years, carry forward amounts blocked by the floor only from years over the ceiling, and set the special rule for net operating loss carryovers, with the effective date.
The conforming amendments inserting a carve-out reference into two subparagraphs.
The section works by amending section 170(b)(2) and section 170(d)(2) of the Internal Revenue Code of 1986 and points to section 172, none of which is indexed here.
