As the year winds down, both donors and nonprofits are preparing for the ripple effects of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025.
Jen Lindstrom - The Journal Record
Nov 14, 2025
As the year winds down, both donors and nonprofits are preparing for the ripple effects of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. This sweeping legislation reshapes how Americans give and how charities receive, with most changes taking effect for tax years beginning Jan. 1, 2026. Whether you’re a retiree with a philanthropic heart or a nonprofit leader planning next year’s campaign, the rules of the game are changing.
Remember that short-lived above-the-line charitable deduction from the pandemic years? It’s making a comeback. Starting in 2026, taxpayers who don’t itemize will again be able to deduct cash donations of up to $1,000 for single filers and $2,000 for married couples filing jointly to qualified public charities. The deduction is in addition to the standard deduction, offering a modest but meaningful incentive for those who give regularly. It applies only to cash gifts to qualified public charities.
For those who itemize, the math gets a little trickier. Beginning in 2026, only the portion of charitable contributions that exceeds 0.5% of adjusted gross income (AGI) will be deductible. If your AGI is $100,000, the first $500 of giving won’t count. Taxpayers in the highest 37% bracket will also find their savings capped at 35%, meaning each dollar donated yields no more than 35 cents in federal tax benefit. These changes aim to limit the most generous tax breaks for high earners, but also may negatively impact organizations.
With these new thresholds, timing and strategy matter more than ever. One tried-and-true tactic is “bunching” which involves combining several years of charitable giving into a single tax year to climb past the new AGI floor and make itemizing worthwhile. Donor-advised funds (DAFs) can help, letting donors claim a large deduction in one year while granting funds to charities gradually. Pairing bunching with appreciated stock donations or charitable remainder trusts can also reduce capital gains and preserve flexibility for long-term philanthropy.
Charities, of course, will feel the impact too. The universal deduction could draw in more small-dollar donors, while reduced incentives for top earners may slightly soften the flow of major gifts. Corporations are not unaffected by the OBBBA changes. Beginning in 2026, a new 1% floor means only contributions exceeding 1% of taxable income are deductible, though the familiar 10% ceiling still applies. For a company with $1 million in taxable income, the first $10,000 in donations brings no tax benefit.
Retirees using Qualified Charitable Distributions (QCDs) still enjoy one of the most tax-efficient ways to give. Individuals age 70½ and older can transfer funds directly from an IRA to a qualified charity, satisfying required minimum distributions and keeping the amount out of taxable income. The QCD rules aren’t affected by OBBBA, and they neatly sidestep the new AGI floors altogether.
The bottom line? While the landscape is changing, generosity still pays. 2025 may be the last chance to give under the old, friendlier deduction rules, so smart donors and nonprofits alike are mapping their next moves. The details may be complex, but the message remains timeless; thoughtful giving never goes out of style.