Recent tax law changes make it more challenging to receive meaningful tax benefits from charitable giving. However, there are ways to use your business to support charities even in this new environment.
Under the current 2026 rules, higher standard deductions and new limitations mean many taxpayers receive little or no benefit from itemizing charitable contributions. Additionally, personal donations are made with after-tax dollars, often increasing the overall cost of giving. But if you use your business to support charities, the outcome may be different.
But as a business owner, you can beat this problem when you use your business to support charities in a tax-smart way.
Your business can structure certain payments to charities as ordinary and necessary business expenses. When structured this way, your business takes the deduction on its business return, reducing not only income taxes but also (potentially) self-employment taxes or, if applicable, payroll taxes. In addition, the business deduction generally lowers your adjusted gross income, improving eligibility for other tax benefits.
To qualify, the payment must have a clear business purpose and a reasonable expectation of financial return. In practice, this means the expense should function as advertising, promotion, or customer development. This is one of the most effective ways to use your business to support charities and still receive tax benefits.
There are several proven strategies:
- Sponsoring charitable events to promote your business
- Donating a percentage of sales to encourage customer purchases
- Supporting local organizations to enhance community branding
- Using coupons or rebate-style programs tied to charitable giving
Proper documentation is essential. To support the deduction, maintain records such as sponsorship agreements, marketing materials, and evidence of business intent.
If you want to discuss how to use your business to support charities, contact us today!