The One Big Beautiful Bill (OBBB) contains several provisions that will have an impact on your donors in 2026. That means that there are tax planning techniques that can be used before the end of 2025. You can include some of this information in your year-end campaigns to encourage giving before year end.
Be the hero and educate your donors to make sure they can receive the most favorable tax treatment for their contributions.
The new tax legislation makes the expanded standard deduction permanent rather than allowing it to sunset after 2025. Beginning in 2025, single taxpayers will claim roughly $15,750 and married couples filing jointly about $31,500, with both amounts indexed for inflation. As a result, fewer taxpayers will itemize, which means fewer people will claim charitable deductions on their federal returns.
To counteract this, fundraisers will need to lean more heavily on the mission-driven reasons for giving instead of emphasizing tax advantages.
A New Deduction for Non-Itemizers
Starting in 2026, people who take the standard deduction will be able to claim a modest, above-the-line deduction specifically for cash donations of up to $1,000 for individuals and $2,000 for joint filers. This will not include gifts to donor-advised funds and private non-operating foundations.
Nonprofits should use this permanent new deduction to pursue more small donations from a wider swath of donors who previously received no tax benefit.
New Limits on Deductible Charitable Gifts For Itemizers
After 2025, itemizers will face an additional hurdle: only the portion of their charitable contributions that exceed 0.5% of their adjusted gross income (AGI) can be deducted. For context, someone with a $200,000 AGI would need to give more than $1,000 before any deduction becomes available. Donors who typically give smaller amounts relative to their income level will have less incentive to contribute.
On the other end of the spectrum, taxpayers in the 37% bracket will have their charitable deduction value capped at 35%. For example, a $10,000 donation will cut tax liability by $3,500 instead of $3,700, resulting in less impact to their bottom line.
These changes could collectively soften charitable giving, making it even more important for organizations to focus their message on their impact and effectiveness.
Corporate Philanthropy Under the New Rules
Companies will also face new requirements starting in 2026. Corporate charitable deductions will be allowed only for contributions exceeding 1% of taxable income, up to the current 10% limit. Excess gifts may still be carried forward.
This threshold may prompt some companies to increase their charitable commitments, while others may pull back on smaller, symbolic contributions that no longer provide a tax benefit. Nonprofits that depend on corporate support will want to encourage businesses to allocate at least 1% of taxable income to philanthropy and consider multi-year sponsorship arrangements that help meet the new floor.
Practical Planning Strategies
Nonprofits should reframe their messages in response to these tax changes. Some useful approaches include:
- Accelerating Donations:
Consolidating several years of giving into 2025—either through direct donations or by contributing to a donor-advised fund (DAF)—can help donors lock in deductions before the new AGI-based limits apply. - Qualified Charitable Distributions (QCDs):
Individuals aged 70½ or older can continue to make direct, tax-free gifts from IRAs to qualified charities. These transfers count toward required minimum distributions and reduce taxable income. The limits are $100,000 per person in 2025 and $108,000 in 2026. - Year-End Timing:
Cash donations must be completed by December 31, 2025, to fall under the current rules. Non-cash contributions, such as appreciated securities, still offer strong tax benefits for itemizers but cannot be applied to the new deduction for standard-deduction filers.
Embracing a New Charitable Landscape
The 2025 tax revisions create both obstacles and openings for charitable giving. While some donors may find traditional tax incentives less valuable, non-itemizers and those who plan strategically can still benefit from the updated framework. Nonprofits that adapt their messaging and fundraising approaches will be in the best position to maintain and grow support under the new rules.
Do you have questions about the BBB or want to stay up to date on key developments for your organization? Contact us at info@evergreenalliancecpa.com.