OBBA Act: Strategies for smarter charitable giving in 2025
On July 4, 2025, the One Big Beautiful Bill Act became law. Several provisions affect charitable giving beginning with 2026 tax years.
The Big News: Non-Itemizers Can Deduct Cash Gifts (Starting 2026)
- Deduct up to $1,000 (single) or $2,000 (married filing jointly) for cash gifts to public charities even if you take the standard deduction.
- Not eligible: gifts to donor-advised funds (DAFs), supporting organizations, or most private (non-operating) foundations.
Key Changes by Donor Situation
If You Take the Standard Deduction
- Universal charitable deduction (2026+): Up to $1,000/$2,000 for eligible cash gifts.
- Higher standard deduction (2025): $15,750 single / $31,500 MFJ / $23,625 HoH; indexed thereafter.
- New seniors’ deduction (2025–2028): Additional $6,000 per eligible person (65+).
Smart move: If you don’t itemize, consider annual cash gifts up to your universal limit. If you’re 65+, check eligibility for the temporary $6,000 deduction.
When Do These Changes Take Effect?
| Change | Effective Date |
|---|---|
| $1,000/$2,000 non-itemizer cash-gift deduction | 2026 tax year |
| 0.5% AGI floor & ~35% cap | 2026 tax year |
| K–12 SGO federal credit | 2027 tax year |
| Estate & gift exemption $15M/$30M | 2026 tax year |
How We Can Help
- Provide gift acknowledgment letters for tax purposes
- Discuss multi-year pledge arrangements
- Explore planned giving options under the new rules
- Connect you with estate planning resources
What You Can Do in 2025
- If you plan to itemize, 2025 is an ideal year to maximize your charitable giving.
- Accelerating gifts into 2025 lets you benefit from today’s more generous deduction rules before changes arrive in 2026.
- Work with your financial or tax advisor to shape a giving plan that fits your goals—especially if you’re in a higher income bracket.
Looking Ahead to 2026
- Beginning in 2026, a new universal charitable deduction will allow non-itemizers to deduct up to $1,000 (single) or $2,000 (married filing jointly) in eligible cash gifts.
- At the same time, new limits will apply for itemizers, including a 0.5% AGI floor and a cap on deductions for higher-income donors.
- Planning your giving now helps you make the most of current opportunities. Consult your financial or tax advisors to align your giving with your goals and the evolving landscape.