Overview of 2026 Federal Tax Changes The tax landscape for charitable giving has undergone significant changes in 2026, affecting how individuals and families in Virginia and Washington DC approach philanthropy. The new tax rules, effective January 1, 2026, were introduced through the One Big Beautiful Bill Act and have major implications for both donors and the nonprofit organizations they support . Among the most notable changes is a provision that allows taxpayers who do not itemize to deduct up to $1,000 for single filers and $2,000 for married couples filing jointly for cash charitable donations . However, gifts to donor-advised funds are excluded from this new deduction, a key distinction for donors who use these vehicles . This change is designed to encourage direct giving to operating charities. For those who do itemize, the rules have also shifted. Itemizers now face a new floor: they must give at least 0.5% of their adjusted gross income (AGI) to claim any charitable deduction at all . This threshold means that smaller donations may no longer provide a tax benefit for those who itemize. Impact on High-Income Donors Top earners face a reduced tax benefit for their generosity. The tax benefit for charitable deductions drops from 37 cents to 35 cents for every $1 deducted for those in the highest tax bracket . This reduction is prompting many high-net-worth individuals to explore alternative giving strategies, such as donating appreciated stock or real estate, which can eliminate capital gains tax on the growth while still providing a deduction . Strategies for Virginia and DC Donors With these changes, tax advisors are recommending a review of giving plans for 2026. The standard deduction remains high at $16,100 for single filers and $32,200 for married couples filing jointly, meaning many donors may find that the new non-itemizer deduction offers the most straightforward tax benefit for smaller gifts . For significant gifts, especially appreciated assets, it is recommended to consult with an experienced advisor to optimize the tax outcome. For donors over age 70½, making a gift directly from an Individual Retirement Account (IRA) to a qualified charity remains a highly effective strategy . These distributions are not taxed as income and can satisfy all or part of the required minimum distribution (RMD), offering a double benefit. For Virginia and DC residents with estates above the exemption threshold, planning is critical to avoid unnecessary taxation. For nonprofit organizations, the new rules mean that they need to communicate these changes effectively to their donor base. The ability to deduct small donations even without itemizing could encourage a new wave of smaller gifts, while the less generous treatment of high-income donors’ deductions may require more strategic engagement with major supporters. Nova Tax & Accounting Services can help nonprofits and donors navigate these changes. For more information on managing contributions and compliance, schedule a consultation today.
1. Private Benefit or Inurement Private benefit occurs when an individual or organization receives a benefit from a Section 501(c)(3) organization. A tax-exempt organization that provides a substantial amount of private benefit may risk losing its tax-exempt status (this does not include paying reasonable salaries). Inurement occurs when an “insider” (officer, director, or key employee) receives any of an organization’s net income or inappropriately uses its assets for personal gain. Any amount of inurement, no matter how small, can jeopardize an organization’s tax-exempt status. Best practices: Pay only reasonable compensation for services rendered Document all compensation decisions Avoid loans to officers or directors Ensure all transactions with insiders are at arm’s length Adopt and enforce a conflict of interest policy 2. Substantial Lobbying Activity Lobbying is defined as “the attempt to influence legislation.” If a Section 501(c)(3) organization conducts substantial lobbying, it risks losing its tax-exempt status. The IRS uses one of two methods to determine whether lobbying activities are substantial: Substantial part test – Subjective test based on facts and circumstances, considering time and money spent Expenditure test – Objective mathematical test applying a dollar limit based on total expenditures (organizations electing this test must file Form 5768) Best practices: Track all lobbying expenditures carefully Educate staff and volunteers on what constitutes lobbying Consider whether to make the 501(h) election (expenditure test) 3. Political Campaign Activity Political campaign activity is directly or indirectly participating or intervening in any political campaign on behalf of or in opposition to any candidate for elective public office. For a 501(c)(3), violating the political campaign prohibition may result in revocation of tax-exempt status and imposition of certain excise taxes. Prohibited activities include: Endorsing or opposing candidates Making contributions to political campaigns Distributing candidate scorecards or voter guides that favor one candidate over another Hosting candidate forums that favor one candidate Best practices: Maintain strict neutrality in all election-related activities Avoid any statement that could be interpreted as endorsement or opposition Ensure candidate forums include all qualified candidates and ask nonpartisan questions 4. Substantial Unrelated Business Activity UBI (unrelated business income) is income that an exempt organization receives from conducting activities not related to its exempt purpose. Even if an organization uses the income from an unrelated activity to help pay for its exempt activities, that income is still UBI. For 501(c)(3)s, if the conduct of UBI-generating activities is substantial, the organization could jeopardize its tax-exempt status. Best practices: Monitor UBI levels and ensure they remain insubstantial relative to overall activities File Form 990-T if UBI exceeds $1,000 Consider whether to establish a for-profit subsidiary for significant unrelated activities Automatic Revocation Failure to file Form 990 for three consecutive years results in automatic revocation of tax-exempt status. Organizations that lose their status must reapply for exemption and may face tax liabilities during the gap period. At Nova Tax & Accounting Services , we provide Form 990 preparation and nonprofit compliance services to help organizations maintain their 501(c)(3) status. Schedule your free consultation to discuss your organization’s compliance needs.
Loudoun County is home to a diverse range of nonprofit organizations serving the community. Local CPAs and accounting firms that specialize in nonprofit accounting, audit, and tax services are available to help organizations maintain compliance . Local Nonprofit Accounting Support Several accounting firms in Loudoun County provide specialized services to nonprofit clients. For example, Mitchell Burns and Co PC, based in Leesburg, provides tax accounting and audit accounting to nonprofit clients, serving organizations with revenues ranging from $298,980 to $4.8 million . Clients include Loudoun Country Day School, Loudoun Convention and Visitors Association, Loudoun Hunger Relief, The Arc of Loudoun, Every Citizen Has Opportunities (ECHO), and Loudoun Cares, among others . Loudoun County Nonprofit Resources Loudoun County Commissioner of the Revenue – Handles BPOL tax registration, business tangible property tax filings, and property tax exemption applications for nonprofits Loudoun County Department of Economic Development – Provides resources for nonprofit organizations operating in Loudoun County Community Foundation for Loudoun and Northern Fauquier Counties – Supports local nonprofits through grantmaking and capacity building Virginia State Compliance for Loudoun Nonprofits Loudoun County nonprofits must comply with all Virginia state requirements, including: Incorporation with the Virginia SCC 501(c)(3) application with the IRS Sales tax exemption with the Virginia Department of Taxation Charitable solicitation registration with VDACS Annual report filing with the SCC Annual Form 990 filing with the IRS Local Tax Compliance Loudoun County nonprofits should also address local compliance requirements: Register for BPOL tax with the Loudoun County Commissioner of the Revenue Apply for business tangible property tax exemptions if eligible Apply for real property tax exemptions if eligible At Nova Tax & Accounting Services , we serve nonprofit organizations throughout Loudoun County and Northern Virginia. Our assurance and compliance services help organizations maintain compliance with federal, state, and local requirements. Schedule your free consultation to discuss your organization’s needs.