In July 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), bringing the largest tax changes in years. Many of these provisions take effect in 2026 and will directly affect how households approach charitable giving and itemized deductions. For families who value philanthropy or rely on deductions to manage taxable income, understanding these changes now is critical to avoid surprises later.
Charitable Deduction Changes
For taxpayers who itemize, a new 0.5% of Adjusted Gross Income (AGI) floor will apply. This means that the first portion of charitable gifts, equal to 0.5% of your AGI, will not be deductible. For example, if your AGI is $200,000 (regardless of filing status), the first $1,000 of donations will not count toward a deduction. This rule could affect smaller annual donors who give regularly but may not exceed the threshold in a given year.
In addition, taxpayers in the top 37% tax bracket will see their charitable deduction benefit capped at 35%, effectively reducing the value of giving for high-income households. However, there is a silver lining: the ability to deduct cash gifts to public charities up to 60% of AGI — previously a temporary rule — will become permanent, allowing generous donors to continue making significant contributions within one tax year.
For those who take the standard deduction, a new universal charitable deduction will apply. Married couples filing jointly can deduct up to $2,000. It’s important to note that this deduction only applies to gifts made directly to qualified operating charities. Contributions to donor-advised funds or private non-operating foundations will not qualify.
Other Itemized Deduction Updates
The law also makes changes to other popular deductions. Between 2025 and 2029, the cap on the state and local tax (SALT) deduction will temporarily increase from $10,000 to $40,000 for most households earning under $500,000 in AGI. This adjustment will provide relief for families in high-tax states who previously had limited ability to deduct property, income, and local taxes.
Meanwhile, the medical expense deduction remains aligned with prior law, with qualifying expenses deductible once they exceed 7.5% of AGI. While this provision is not new under OBBBA, it continues to be an important part of tax planning for families facing significant healthcare costs.
Planning Considerations for Donors
These changes create both challenges and opportunities for individuals who want to make charitable giving part of their financial plan. One strategy for high-income donors is to accelerate gifts into 2025 before the 35% cap takes effect. Making larger contributions now may lock in more favorable tax treatment while also supporting charities in advance of the new rules.
Another approach is to consider “bunching” donations. Instead of spreading smaller gifts across several years, donors may choose to consolidate several years of giving into one year. This allows them to surpass the new 0.5% AGI floor and take advantage of itemizing deductions. In off-years, when they claim the standard deduction, they can still benefit from the new universal above-the-line deduction.
Donor-advised funds (DAFs) remain a flexible tool in this environment. By making a large contribution to a DAF in one tax year, a donor receives the deduction immediately while maintaining the ability to distribute grants to charities over time. This approach can work well alongside a bunching strategy.
The Bottom Line
The One Big Beautiful Bill Act changes how both large and modest gifts are treated under the tax code. While the new rules may limit deductions for some taxpayers, they also introduce opportunities for planning, especially for families who are proactive. Charitable giving remains a meaningful way to align financial planning with personal values, but the timing and structure of those gifts will now matter more than ever.
By reviewing your giving strategy before these changes take effect in 2026, you can position yourself to maximize tax benefits while continuing to support the causes you care about most.
If you’d like to discuss how these new rules affect your personal plan, contact our team. We’ll help you evaluate your charitable options and integrate them into your broader financial strategy.
Copyright © 2025. BCA Private Wealth. All rights reserved.
Sources
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Holland & Knight – Impact of the One Big Beautiful Bill Act on Tax-Exempt Organizations
https://www.hklaw.com/en/insights/publications/2025/08/impact-of-the-one-big-beautiful-bill-act-on-tax-exempt-organizations -
Tax Foundation – One Big Beautiful Bill Act Tax Changes
https://taxfoundation.org/research/all/federal/one-big-beautiful-bill-act-tax-changes/ -
OC-CF – Charitable Giving After the One Big Beautiful Bill
https://www.oc-cf.org/charitable-giving-after-one-big-beautiful-bill-what-donors-need-to-know/ -
CLA Connect – How the One Big Beautiful Bill Act Affects Nonprofits
https://www.claconnect.com/en/resources/blogs/nonprofits/how-the-one-big-beautiful-bill-act-affects-nonprofits
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