Charitable Giving is Better in 2025

On July 4, 2025, the One Big Beautiful Bill Act (OBBB) was signed into law, extending key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and introducing new tax rules that could significantly impact charitable giving.

Here’s what donors need to know:

1. Charitable Deduction for Non-Itemizers

Starting in 2026, taxpayers who don’t itemize can deduct up to $1,000 ($2,000 for joint filers) in cash donations to qualified charities. However, donations to donor-advised funds and private foundations don’t qualify.

Takeaway: This broadens access to charitable deductions—potentially increasing giving from the 90% of taxpayers who take the standard deduction.

2. Cap on High-Income Deductions

Also in 2026, itemized deductions for charitable contributions will be capped at 35% for those in the highest tax brackets, down from 37%.

Takeaway: High earners may want to accelerate large gifts into 2025 to benefit from the higher deduction rate.

3. Deduction “Floors” for Itemizers and Corporations

Itemizers can only deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI), and corporations must exceed a 1% floor.

Takeaway: “Bunching” donations into a single tax year or using donor-advised funds may help maximize deductions under the new rules.

4. Extended & Expanded Tax Provisions

• Tax brackets and higher standard deductions ($15,750 single / $31,500 joint) are made permanent.

• The ability to deduct 60% of AGI for cash gifts to public charities is extended.

• The estate and gift tax exemption increases to $15 million in 2026.

Takeaway: Most estates will avoid federal estate tax, making lifetime charitable giving more impactful.

5. Other Notable Changes

• State and local tax (SALT) deduction cap increased to $40,000 starting in 2025, phasing out at higher incomes.

• A new tax credit (up to $1,700 per filer) for donations to school voucher organizations starts in 2027.

• A tiered tax on university endowments targets institutions with large per-student assets.

Takeaway: Increased SALT deductions could encourage more itemizing, and donors to education causes should assess how to best support institutions under new rules.

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Plan Now, Give Strategically

With many changes taking effect in 2026, 2025 may be a strategic year to give. Consider timing your donations, evaluating the type of gift (cash vs. non-cash), and consulting with a tax advisor to align your giving with your financial and philanthropic goals.