The One Big Beautiful Bill (OBBB) brings some changes to charitable giving – and a head-scratching layer of complication. Starting January 1, 2026, the tax rules get trickier and a little less generous.
Let’s break it down and talk about what we can do.
If You Take the Standard Deduction
Previously, non-itemizers could not deduct any charitable contributions. Under the new rules, they can deduct cash gifts up to:
Previously, non-itemizers could not deduct any charitable contributions. Under the new rules, they can deduct cash gifts up to:
- $1,000 for single filers
- $2,000 for married filing jointly
It’s not huge, but it does reward a bit of generosity.
If You Itemize Deductions
You’ll face new limitations:
You’ll face new limitations:
- You can only deduct the portion of your giving that exceeds 0.5% of your AGI.
Example: If you earn $200,000, the first $1,000 of charitable gifts doesn’t count. Anything above that may be deductible.
- The value of your deduction is capped at 35%, even if you’re in a higher tax bracket.
So if you’re in the 37% bracket, your $10,000 donation will only reduce your tax bill by $3,500—not $3,700.
What Can We Do?
1. Time your donations:
- Accelerate donations in 2025 if possible—before the new limits take effect in 2026.
- Use a bunching strategy: By combining multiple years’ worth of charitable gifts into one year, you may get a bigger tax break than spreading them out annually.
2. If you are over the age of 70 ½ consider a Qualified Charitable Distribution (giving money straight from your IRA to a charity.)
- This lets you give directly from your IRA to charity, satisfies your required minimum distribution, and keeps the gift out of your taxable income.
- Even better? It sidesteps the new deduction limits—whether you itemize or not.
If this has you wondering about the best way to be generous —reach out. I love a good deduction puzzle.
More next week,
Barbara
Barbara
July 20, 2025
Source: https://www.fidelitycharitable.org/articles/obbb-tax-reform.html
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