The One Big Beautiful Bill (OBBB) Act, enacted on July 4th, 2025, introduces important modifications to the tax treatment of charitable giving. Beginning January 1st, 2026, donors will be subject to updated guidelines that are intended to enhance both the clarity and effectiveness of philanthropic contributions.
Donors now have access to expanded and more flexible options for tax deductions, regardless of whether they itemize and provisions related to planned giving have also been enhanced. Please review the summary below for the key updates relevant to your charitable planning.
For Itemized Deductions:
- People who itemize their deductions will face a new minimum threshold for charitable contributions. The deduction for charitable gifts will be reduced by 0.5% of adjusted gross income (AGI). For instance, if someone’s AGI is $200,000, the first $1,000 of their charitable donations each year won’t be deductible; only amounts above that qualify for a tax break.
For Non-Itemized Deductions:
- Taxpayers who do not itemize deductions can still deduct up to $1,000 for charitable contributions ($2,000 for married couples). This means charitable tax deductions will be available to everyone, not just those who itemize, making it simpler for donors to receive tax advantages from donations.
For Planned Giving:
- The federal estate and gift tax exemption is $15 million per person and $30 million for couples filing jointly (adjusted for inflation). Some states have lower limits. Large estates may benefit from planned or legacy giving, while smaller estates might accelerate gifts to take advantage of income tax deductions and increase their impact. We suggest speaking with your tax or estate advisor to explore planned giving options that best suit your needs or to obtain more in-depth information.
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