The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, ushered in a range of new tax provisions and made permanent many others. Among those changes, updates to charitable giving rules have the potential to significantly shift tax planning strategies for a large swath of taxpayers.
Whether you are a high-income earner, a philanthropist, or simply someone who makes charitable contributions to your favorite non-profits, it is critical to understand how these new rules could affect your financial planning for tax year 2025 and beyond. Here’s how the OBBBA alters the charitable giving landscape for both non-itemizers and itemizers, and what you can do to prepare for these changes.
Note: Specific implementation details and comprehensive IRS guidance are still forthcoming for many OBBBA provisions. For the most current information, consult your tax advisor.
Charitable deductions for non-itemizers
Starting in the 2026 tax year, a new permanent provision allows non-itemized filers to make an above-the-line tax deduction for qualified charitable contributions, up to $1,000 for individuals and $2,000 for married couples filing jointly. A similar provision was introduced with the CARES Act during the COVID-19 pandemic to encourage more charitable giving, with about 90 million taxpayers claiming the $300 deduction in 2020-2021.
Charitable deductions for itemizers and corporations
For filers who itemize their tax returns, charitable donations can only be deducted if the total amount exceeds the minimum threshold (or “floor”) of 0.5% of the taxpayer’s adjusted gross income (AGI). For example, a married couple filing jointly with an AGI of $500,000 could only deduct charitable donations in excess of $2,500.
The law also includes a similar provision for corporations, which will only be able to deduct qualified charitable contributions that exceed 1% of their taxable income.
These changes go into effect for the 2026 tax year.
Itemized deduction phase-out
In addition to the charitable deduction provisions, the new law eliminates Section 68’s overall limitation on itemized deductions for higher earners. Instead, a new rule takes effect in 2026: itemized deductions may be reduced by 2/37ths of the lesser of your total itemized deductions or the amount of taxable income that exceeds the 37% tax bracket threshold. This change will likely have a direct impact on how high-income taxpayers approach their charitable giving.
Adjusting charitable giving tax strategies after OBBBA
Tax planning around charitable contributions after OBBBA will look different than it has in years prior, and the degree of change will vary significantly depending on individual circumstances. With the overall limitation on deductions now tied directly to both income and the size of your itemized deductions, high-income taxpayers in particular may need to revisit their giving strategies. Structuring gifts, the use of charitable trusts, and the timing of donations could all become more important for maximizing tax benefits.
Moving up donations to 2025
Donors in higher tax brackets who are considering a large philanthropic gift may want to think about fast-tracking their gift to 2025 to maximize their deduction under the current marginal rate before the new cap goes into effect for 2026.
AGI deduction limit considerations
For donors who routinely maximize their allowable charitable deductions based on AGI limits, the new itemized deduction rule could impact the value of your deductions. It’s also important to consider how this floor interacts with gifts of appreciated assets (which are often subject to lower AGI deduction limits). The timing and calculation of the deduction — specifically, whether the 0.5% floor is applied before other limits or after — are details that tax professionals are still working to clarify.
Qualified charitable distributions
For those 70½ and older, consider using qualified charitable distributions (QCDs) from a traditional, SEP, or SIMPLE IRA to move charitable deductions away from itemized deductions and offset retirement income. QCDs can be counted toward your annual required minimum distributions (RMDs), if certain rules are met.
‘Bunching’ charitable donations
Now more than ever, "bunching" charitable donations from several years into one year to maximize charitable contribution tax benefits may make sense. For example, rather than giving $10,000 per year, giving $50,000 every five years could allow you to qualify for a larger contribution deduction from itemizing.
Consult with your tax advisor
With these new charitable giving tax implications, personalized planning and scenario analysis are more critical than ever. As these provisions become permanent fixtures in tax law, understanding their nuances — and how they apply to your specific situation — will be crucial for effective charitable planning and maximizing your tax benefits.
Whether you give modestly or contribute large sums, now is the time to review your approach and consult with your Mowery & Schoenfeld tax advisor to ensure your charitable goals align with the new rules.
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READ MORE: What the One Big Beautiful Bill Act means for individuals