Key Highlights

  • For years, Australians could claim a tax deduction for a gift to charity only if it was worth $2 or more.
  • The change is in Schedule 1 of the Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Act 2026.
  • Schedule 1 amends section 30-15 of the Income Tax Assessment Act 1997, which sets out the rules for deductible gifts.
  • The ATO has updated its guidance to match.

For years, Australians could claim a tax deduction for a gift to charity only if it was worth $2 or more. That rule has now gone. A law passed in June removed the $2 minimum for gifts to deductible gift recipients and backdated the change to 1 July 2024. With 2025–26 returns due by 31 October 2026, small donations that would once have been ignored can now be claimed, provided donors keep a record of them.

How the $2 donation minimum was scrapped

The change is in Schedule 1 of the Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Act 2026. The Act received royal assent on 30 June 2026 and is Act No. 58 of 2026, so the change is now law and no longer a proposal.

Schedule 1 amends section 30-15 of the Income Tax Assessment Act 1997, which sets out the rules for deductible gifts. The amendment applies to gifts made on or after 1 July 2024.

The ATO has updated its guidance to match. Its "What's new for individuals" page for 2025–26 says taxpayers "can claim a tax deduction for gifts made to eligible deductible gift recipients, regardless of the amount donated".

Which gifts qualify, and which still don't

Removing the $2 floor does not widen the range of organisations that qualify. The gift still has to go to a deductible gift recipient, or DGR, which is an organisation endorsed to receive tax-deductible gifts. Many charities have DGR status, but not all of them do.

The ATO says special rules still apply in three areas: political donations, some gifts of property, and contributions where the donor receives a material benefit in return.

The $2 change does not apply to political donations at all. Those continue to fall under their own separate rules.

The catch: you still need a record

The rule change does not remove the need for evidence. The ATO says donors still need a record of each gift they claim.

When there is no formal receipt, the ATO says other evidence can do the job, such as a receipt issued online or a bank or card statement showing the payment. This makes tap-and-go and online donations much easier to claim than coins dropped in a tin.

Several small gifts to the same DGR during a year can be added together and claimed as one amount.

What a small donation is now worth at tax time

The tax benefit of each small gift is modest. It depends on the donor's marginal tax rate, so a deduction is worth more to a higher earner.

Hypothetical example: Priya taps her card for $1.50 on a DGR-endorsed animal shelter's donation terminal six times during 2025–26, receiving nothing in return, giving $9 in total. Her card statement shows each payment. Under the old rule, none of those gifts was deductible because each was below $2. Under the new rule, she can claim $9.

Priya's claim works because each payment went directly to the DGR, she received nothing in return and each payment appears on her statement. If she had used the same $1.50 to buy a raffle ticket or a chocolate bar, the payment would not count as a gift.