Get the latest tax updates and learn how strategic giving can make a bigger impact for you and the causes you care about.
The One Big Beautiful Bill Act (OBBBA), now law, introduces significant changes to the U.S. tax code. While some of these new provisions might seem to reduce the incentive for charitable giving, strategic donors can actually benefit more than ever if they plan carefully.
Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000 (individuals earning a modified adjusted gross income over $75,000 or $150,000 for joint filers). Beyond that amount, the deductions are phased out gradually and, for anyone earning more than $175,000, the deduction is fully phased out.
Individuals who don’t itemize can claim a charitable deduction for cash gifts up to $1,000 per for individuals and $2,000 for couples filing jointly.
Beginning in 2026, there will be a new floor on charitable contributions, as well as a new reduction in tax benefits for taxpayers in the top income tax bracket. Taxpayers now only receive tax benefits for charitable giving that exceeds o.5% of their adjusted gross income. For example, if a donor’s AGI is $200,000, they can only deduct giving in excess of $1,000. The deduction rate for those in the top income bracket drops from $0.37 to $0.35 per dollar donated, capping the tax benefit at 35%.
If you itemize deductions, only the amount of your charitable contributions that exceeds 0.5% of your adjusted gross income (AGI) will be deductible. For example, if your AGI is $200,000 and you make a $3,000 charitable contribution, the first $1,000 will not be deductible and your charitable deduction will be $2,000. However, you can carry forward the $1,000 limited donation as a future deduction for up to five years.
If your income is high enough to put you in the top tax bracket, your total itemized deductions (including charitable donations) will be reduced. The reduction is based on how much your income goes over the threshold for the highest tax bracket. A high earner in the 37% tax bracket will essentially have the tax benefit of all the itemized deductions capped at a 35% tax rate. The reduction is applied after the new 0.5% AGI floor for charitable deductions have been taken into account.
For many years, state and local income and property taxes (SALT) have been deductible by taxpayers who itemize. However, the SALT deduction limit was set at $10,000 by the 2017 Tax Cuts and Jobs Act (TCJA). This limit was a concern for members of Congress from states with substantial income taxes. Taxpayers in those states who face high state or local income taxes and significant taxes on their homes were not able to deduct the full amount of those tax payments.
The SALT deduction increased to $40,000 in 2025 and $40,400 in 2026. It will be scaled up by an additional 1% each year until 2029. This higher limit will permit most taxpayers who itemize to deduct their full state and local income tax and the property tax on their home.
The new $40,000 SALT limit applies for 2025 through 2029. However, high income taxpayers will have a reduced deduction. The increased SALT deduction will cause more taxpayers to itemize.
Under the new law, the current income tax brackets have been made permanent. Effective in the 2025 tax year, income tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%
The IRS refers to the IRA charitable rollover as a qualified charitable distribution (QCD). An individual over age 70½ is permitted to make a transfer directly from his or her IRA custodian to a qualified charity. The transfer is not included in taxable income. If the IRA owner is over age 73, the distribution may fulfill part or all of the IRA owner’s required minimum distribution (RMD).
There are some limits for the IRA charitable rollover. The IRA owner must be at least age 70½ and the maximum transfer in 2025 is $108,000. The transfer must be to a qualified exempt charity and may be for a designated purpose or field of interest fund. However, it may not be to a donor advised fund (DAF) or supporting organization (SO). In addition, transfers may not be for a charity dinner or other event that involves a partial benefit to the donor. The entire QCD must be for a qualified charitable purpose.
In 2025, individuals who itemize deductions may deduct charitable gifts of cash up to 60% of their contribution base, which is usually their adjusted gross income (AGI). While the 60% limit is substantial, some generous individuals give more than this and may carry forward and deduct the excess gift amounts over the next five years.
With substantial increases in value for both stocks and real property, many donors will find that a 2025 gift of appreciated property is attractive. A gift of appreciated stock or land provides two benefits for the donor. First, the donor may receive a charitable contribution deduction for the fair market value of the stock or land. Second, the charity is tax-exempt and therefore the donor is able to bypass tax on the capital gain.
A popular strategy called bunching allows donors to combine multiple years of giving into one tax year, surpassing the standard deduction threshold and preserving tax benefits. The charitable “bunching” strategy is to give double the amounts to charity in one year and itemize deductions. The next year, the donor uses the standard deduction. This will be especially popular for those who benefit from the new $6,000 Senior Deduction (added to the standard deduction).
The OBBBA doesn’t eliminate charitable giving incentives, it just raises the bar for accessing them. To make the most of the new rules:
One Big Beautiful Bill: Impact on Charitable Giving | Fidelity Charitable
Key Tax Changes:
One Big Beautiful Bill: Impact on Charitable Giving | Fidelity Charitable
Estates and Gifts:
KPMG report: Estate and gift tax provisions in “One Big Beautiful Bill Act”
Farmers & Ranchers:
Key Tax Changes for Farmers and Ranchers in the One Big Beautiful Bill | TSLN.com
Impact on Age to Receive Social Security:
Does Trump’s new ‘big beautiful bill’ change the age at which older Americans should start claiming Social Security?
Donations of Company Stock:
What is the tax deduction for donations of my company stock? – myStockOptions.com
Key Takeaways and Notable Provisions of OBBBA:
Morgan Stanely OBBBA Cheat Sheet
This content is informational and educational in nature. It is not offering professional tax, legal or accounting advice. For specific advice on your taxes, finances or estate, please consult a qualified professional advisor.
Please complete this form and someone will get back to you as soon as possible.