1-percent floor on deduction of charitable contributions made by corporations

(a) In general Section 170(b)(2)(A) is amended to read as follows: (A) In general Any charitable contribution (other than any contribution to which subparagraph (B) or subparagraph (C) applies or any contribution for which a deduction is not allowable under this section without regard to this paragraph) shall be allowed as a deduction under this subsection (a) only to the extent that the aggregate of such contributions— (i) exceeds 1 percent of the taxpayer’s taxable income, and (ii) does not exceed 10 percent of the taxpayer’s taxable income.. (b) Application of carryforward Section 170(d)(2) is amended to read as follows: (2) Corporations (A) In general 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, except that, for purposes of determining under this subparagraph whether such contribution is allowed in such succeeding taxable year, contributions in such succeeding taxable year (determined without regard to this paragraph) shall be taken into account under subsection (b)(2)(A) before any contribution taken into account by reason of this paragraph. (B) 5-year carryforward 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. For purposes of the preceding sentence, contributions shall be treated as allowed on a first-in first-out basis. (C) Contributions disallowed by 1-percent floor carried forward only from years in which 10 percent limitation is exceeded In the case of any taxable year from which a charitable contribution is carried forward under subparagraph (A) (determined without regard this subparagraph), subparagraph (A) shall be applied by substituting clause (i) or (ii) for clause (ii). (D) Special rule for net operating loss carryovers The amount of charitable contributions carried forward under subparagraph (A) shall be reduced to the extent that such carryfoward would (but for this subparagraph) reduce taxable income (as computed for purposes of the second sentence of section 172(b)(2)) and increase a net operating loss carryover under section 172 to a succeeding taxable year.. (c) Conforming amendments Subparagraph (B)(ii) and (C)(ii) of section 170(b)(2) are each amended by inserting other than subparagraph (C) thereof after subsection (d)(2). (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.

(a) In general Section 170(b)(2)(A) is amended to read as follows: (A) In general Any charitable contribution otherwise allowable (without regard to this subparagraph) as a deduction under this section for any taxable year, other than any contribution to which subparagraph (B) or (C) applies, shall be allowed only to the extent that the aggregate of such contributions— (i) exceeds 1 percent of the taxpayer's taxable income for the taxable year, and (ii) does not exceed 10 percent of the taxpayer's taxable income for the taxable year.. (b) Application of carryforward Section 170(d)(2) is amended to read as follows: (2) Corporations (A) In general 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, except that, for purposes of determining under this subparagraph whether such contribution is allowed in such succeeding taxable year, contributions in such succeeding taxable year (determined without regard to this paragraph) shall be taken into account under subsection (b)(2)(A) before any contribution taken into account by reason of this paragraph. (B) 5-year carryforward 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. For purposes of the preceding sentence, contributions shall be treated as allowed on a first-in first-out basis. (C) Contributions disallowed by 1-percent floor carried forward only from years in which 10 percent limitation is exceeded In the case of any taxable year from which a charitable contribution is carried forward under subparagraph (A) (determined without regard this subparagraph), subparagraph (A) shall be applied by substituting clause (i) or (ii) for clause (ii). (D) Special rule for net operating loss carryovers The amount of charitable contributions carried forward under subparagraph (A) shall be reduced to the extent that such carryfoward would (but for this subparagraph) reduce taxable income (as computed for purposes of the second sentence of section 172(b)(2)) and increase a net operating loss carryover under section 172 to a succeeding taxable year.. (c) Conforming amendments Subparagraphs (B)(ii) and (C)(ii) of section 170(b)(2) are each amended by inserting other than subparagraph (C) thereof after subsection (d)(2). (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.