The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, brings long-awaited clarity to tax and estate planning. It also creates new complexities for charitable giving. Keep in mind that donors will be impacted differently depending on how they give, when they give, and how much they earn.
Your guidance is more important than ever. Start by reviewing the key components of the new legislation and understanding how they may affect your donors.
More Certainty for Tax and Estate Planning
The OBBBA made several key provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) permanent, including the following:
• Estate and Gift Tax Exemption. This was not only made permanent but further increased to $15 million per individual ($30 million per married couple) in 2026.
• Standard Deduction. This was also made permanent, rising to $15,750 (single filers) and $31,500 (married couples filing jointly) in 2025.
• Top Income Tax Rate. The current tax rates were made permanent, including the top 37% bracket (which had been scheduled to revert to 39.6%).
This rare window of predictability allows taxpayers to plan with confidence—especially helpful for donors considering estate gifts or lifetime giving strategies.
New Opportunities and Challenges for Charitable Giving
The OBBBA introduced new rules that take effect in 2026 and will impact donors in various ways:
• Charitable Deduction for Nonitemizers. Nonitemizers can deduct gifts to public charities up to $1,000 (for single filers) or $2,000 (for married couples filing jointly), excluding those made to donor-advised funds (DAFs). Since the TCJA introduced a higher standard deduction in 2017, many donors no longer itemize and therefore lose out on charitable deductions. This deduction is a useful alternative for nonitemizers that has the potential to increase interest in charitable giving.
• Deduction Cap for Top Earners. Itemizers in the top 37% tax bracket will see their charitable deductions capped at 35%. High-income donors thinking about making a significant gift should consider giving this year. The difference between 37% and 35% may seem small, but this slight decrease in deductibility can result in a sizable loss of tax savings on major contributions.
• Giving Floor for Itemizers. Donors will need to give at least 0.5% of their adjusted gross income (AGI) before beginning to deduct charitable gifts. For example, a donor with an AGI of $200,000 can only deduct any gift amount over $1,000. Donors will need to pay even more attention to the timing and amounts of their gifts. Strategically bunching gifts for multiple years into one year (essentially, giving larger gifts less frequently) will likely play a larger role in charitable giving to compensate for this floor.
• Permanently Higher Deduction Limit on Cash Gifts. The TCJA’s 60%-of-AGI cap on cash gifts to public charities is now permanent. While this is good news, donors should continue to explore alternatives to cash gifts to identify the tax and planning benefits that are best aligned with their goals and circumstances.
• New 65+ Deduction. In 2025–2028, taxpayers age 65 or older can take a $6,000 deduction whether they itemize or not—a deduction that phases out once modified AGI exceeds $75,000 (single filers) or $150,000 (joint filers). This may free up additional money for meeting charitable goals.
Next Steps
Tax incentives aren’t the main reason people support charitable organizations, but they do influence how and when they give. It will be important for you to understand these changes and help donors plan effectively under new rules that reshape donor incentives and obligations.
• Encourage high-income donors to give before year end, either directly or by contributing to a DAF.
• Highlight the bunching strategy for donors who won’t meet the new floor for itemizers.
• Help donors age 65 and older explore how to best utilize the money freed up as a result of the new deduction—potentially allocating some or all of it toward meeting charitable goals.
• Remind donors that you can collaborate with attorneys and advisors, provide information or illustrations, or help them explore their options.
Donors are sure to have questions. You can be ready with answers and options.
