Charitable Giving Under the One Big Beautiful Bill Act: What Donors Need to Know
Andy Arnold September 17, 2025
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, brings a variety of changes to the U.S. tax code. One of the most notable areas of change is treatment of charitable contributions. These changes, all taking effect in 2026, include:
- Only the amount above 0.5% of a taxpayer’s adjusted gross income (AGI) is deductible as charitable contributions. This means that if their AGI is $500,000, they will only receive a deduction for charitable contributions above $2,500.
- The above-the-line charitable deduction for non-itemizers has increased to $1,000 ($2,000 for joint filers)—these can be taken even if a taxpayer takes the standard deduction.
- Itemized deductions are reduced by 2/37 of the lesser of their deductions or their income above the 37% tax bracket threshold.
These changes allow for strategies that can benefit taxpayers:
- Given the AGI limitation on charitable contributions, taxpayers would benefit from bunching multiple years’ worth of contributions in years when their AGI is projected to be lower. This would ensure that more of their charitable contributions are deductible.
- In years that taxpayers are projected to take the standard deduction, they can still donate up to $1,000 ($2,000 for joint filers) to take full advantage of the new above-the-line deduction.
- For high income taxpayers (those in the 37% tax bracket), planned charitable contributions should be taken before the end of the 2025 tax year to ensure that they are avoiding the 2/37 limitation on itemized deductions that is taking effect in 2026. Below is an example of potential tax savings by donating in 2025 rather than 2026:
There are unique tax planning opportunities available for charitable giving that could lead to tax savings under the new tax law, but you don’t need to have everything figured out on your own. If you have a specific scenario or want to know how these changes affect you, Truepoint’s tax specialists are happy to assist.
