How the OBBBA Changes Charitable Deductions for Deconstruction Donations in 2026

The One Big Beautiful Bill Act, enacted as Public Law 119-21 on July 4, 2025, changed the federal charitable-deduction calculation beginning in 2026. For deconstruction projects, the most important point is that the new rules affect deductibility; they do not change how an appraiser determines the fair market value of donated materials.

Educational information only. This article summarizes federal sources available as of July 25, 2026. It is not tax or legal advice and does not estimate anyone's deduction or tax savings. Ask a qualified tax adviser to apply the law to the donor, property, donee, basis, holding period, and return.

The principal sources are the Congress.gov summary of H.R. 1 and IRS Publication 505 for 2026.

The 0.5% floor for itemizers#

Beginning in 2026, an individual who itemizes generally deducts aggregate charitable contributions only to the extent they exceed 0.5% of the individual's contribution base. IRS Publication 505 describes the contribution base in this context as adjusted gross income without a net operating loss carryback.

The portion below the floor is not deductible for that year. This rule is in addition to other limitations that may apply.

A simple floor calculation#

If contribution base is $400,000:

0.5% of contribution base is $2,000.
Aggregate charitable contributions must exceed $2,000 before the excess enters the next part of the deduction calculation.

That is not a tax-savings estimate. The amount ultimately deductible can still depend on property type, donee type, basis, holding period, other contributions, percentage limitations, ordering rules, carryforwards, and the overall itemized-deduction limitation.

The non-itemizer deduction is cash-only#

The Act also created a charitable deduction of up to $1,000 for qualifying individuals and $2,000 for qualifying joint filers who do not itemize. The current IRS summary describes this as applying to eligible cash contributions.

Donated building materials are noncash property. They do not become eligible for that cash-only deduction merely because their value is supported by an appraisal.

Carryforwards and the new floor#

The Congress.gov summary distinguishes contributions by year:

excess contributions made in 2026 or later remain subject to the 0.5% floor when carried into a later year; and
excess contributions made before 2026 and carried forward are not subject to the new floor.

Carryforward treatment can interact with other contributions and limits. Donors should not apply a flat percentage or assume the entire appraised value becomes deductible in one year.

Appraised value and deductible amount are different questions#

A qualified appraisal addresses fair market value. IRS Publication 561 defines that value using a willing-buyer/willing-seller standard and all relevant facts.

The return calculation asks separate questions, including:

Is the recipient a qualified organization for this contribution?
Is the donor entitled to deduct fair market value or a reduced amount?
What basis and holding-period rules apply?
Which percentage limitation applies to this property and donee?
How do the 0.5% floor, other contributions, and overall itemized-deduction limitation interact?
Is any unused amount eligible for carryforward?

An appraisal cannot answer those return-level questions, and software should not present appraised value as promised tax savings.

What remains unchanged for appraisal documentation#

The 2026 deduction floor did not replace the noncash-substantiation rules. A claimed deduction over $5,000 for an item or group of similar items generally still requires a qualified appraisal and Section B of Form 8283, subject to exceptions.

The current Form 8283 instructions address:

grouping similar items;
qualified-appraiser requirements;
appraisal signing and receipt timing;
appraiser and donee declarations;
exceptions for specified property; and
situations in which the appraisal must be attached.

See the updated Form 8283 guide for a focused substantiation overview.

A better project-planning conversation#

Instead of asking “What percentage of the appraisal will I save in taxes?”, a donor can bring these inputs to a tax adviser:

expected contribution date;
donor entity and filing status;
projected contribution base and itemized deductions;
property basis, acquisition date, and holding period;
proposed donee and intended handling of the materials;
preliminary inventory and independent fair market value evidence;
other current-year charitable contributions; and
existing charitable carryforwards, separated into pre-2026 and post-2025 amounts.

That information supports a project-specific model without turning a preliminary appraisal or salvage estimate into a guaranteed deduction.

AIpraisal supports appraisal workfile organization, comparable research, evidence capture, and exports. It does not calculate a donor's tax liability or decide whether a contribution is deductible.