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Charitable Giving After “One Big Beautiful Bill”: What Donors Need to Know

By July 31, 2025October 14th, 2025No Comments

Changes are effective for 2026 and thereafter unless noted otherwise.

The 2025 tax reform package enacted by Congress in July includes several key provisions taking effect in 2026 that directly affect charitable giving—particularly for individuals who itemize deductions and corporate donors.

Here are the key changes worth noting:

1

Larger Estate and Gift Tax Exemptions are Permanent

The estate and gift tax exclusion is raised to $15 million per individual filer ($30 million for married joint filers) beginning in 2026, indexed for inflation. There is no sunset in the law. The 2025 amount is $13,990,000 and would have reverted to 50% of that amount in 2026 under prior law.
2

60% of Adjusted Gross Income (AGI) Contribution Limit Made Permanent

Under prior law, the 60% of AGI contribution limit for cash gifts to charity by individuals would have ended December 31, 2025. The 60% AGI limit for cash contributions to public charities is made permanent in the Bill.
3

New Cap on the Value of Itemized Deductions

Under the new law, the total value of your itemized deductions cannot reduce your tax bill by more than 35% of the amount deducted, even if you're in a higher tax bracket.
4

Above-the-line deduction for non-itemizers ($1,000 / $2,000)

Individuals can deduct up to $1,000 (single) or $2,000 (married filing jointly) in charitable contributions without itemizing. This is a permanent provision and serves as a replacement for the temporary above-the-line deduction of $300 (single) and $600 (married) introduced under the CARES Act. The standard deduction is set permanently at $30,000 for married joint filers; $23,625 for head of household; $15,750 for single filers. Adjusted annually for inflation.
5

New Charitable Deduction Floor

Individual taxpayers who do itemize must exceed 0.5% of AGI before any charitable donation qualifies for a deduction. This replaces the prior "no floor" structure and creates a modest threshold before deductions apply.

For example: If your AGI is $500,000, the first $2,500 of charitable contributions ($500,000 x 0.5%) would not be deductible. Only giving above that amount would qualify for a charitable deduction—if you contributed $10,000 to charity, $7,500 would be deductible.

For C-corporations which are allowed a charitable deduction of up to 10% of taxable income, the Bill limits the deduction to gifts that exceed 1% of the corporation's taxable income.

6

Credit for Gifts to State Tuition Programs

The Bill allows a federal tax credit of up to $1,700 for gifts to qualified elementary and secondary education scholarships programs by states.

Hear from Margita Labhard, Senior Director of Philanthropic Strategy for the Orange County Community Foundation, on strategies you may want to consider for optimizing the benefit of your charitable contributions.

Hear from Dan Whittaker, CPA, CEPA, Managing Partner of Whittaker & Company, on strategies you may want to consider for optimizing the benefit of your charitable contributions.

What This Means for You, Your Family and Business

This legislation underscores the importance of planning your giving intentionally. Here are a few considerations:

Know the New Deduction Rules

  • Non-itemizers can now deduct up to $1,000 (single) or $2,000 (married) above the standard deduction.
  • Itemizers must exceed 0.5% of AGI before any charitable gifts qualify for a deduction.
  • New 35% cap limits the value of itemized deductions, including charitable gifts.
  • Itemizers who give cash to public charities can continue to use the 60% of AGI contribution limit but are subject to 0.5% of AGI floor and 35% rate cap for deductions.

Give Strategically

  • Consider accelerating charitable donations in 2025 as appropriate prior to policy taking effect in 2026.
  • Donate appreciated assets (stock, real estate, private interests) to avoid capital gains and receive full-value deductions.
  • Prioritize large gifts in high-income years to maximize the benefit before hitting the 35% cap.
  • Consider bunching contributions into one year using vehicles like your OCCF donor-advised fund to manage deduction thresholds and multi-year giving.
  • For donors age 70 1/2 and older, the floor on itemized deductions and the cap on the rate at which itemized deductions are claimed may mean that the qualified charitable distribution from an IRA saves substantially more tax than an itemized deduction for a charitable gift. Qualified Charitable Distributions (QCD) are not allowed to DAFs but may be made to other types of community foundation field of interest and agency funds and/or directly to public charities.

Watch for Increased Scrutiny

  • The IRS and Franchise Tax Board continue to look for technicalities to deny charitable deductions. Work with qualified advisors and appraisers for gifts over $5,000.

C-Corporation Owners Take Note

  • Corporate giving deduction limit of 10% of taxable income is subject to a 1% floor. If the corporation receives recognition in connection with the gift, the corporation may be able to deduct the entire payment as an advertising expense.

As you navigate these changes and impacts, please consult your financial and tax advisors to align your giving with your values and your evolving tax strategy. Planning ahead will help you preserve impact and efficiency in a changing landscape.

The Orange County Community Foundation is here to assist with all your contributions including complex assets (real estate, business interests, and other long-term appreciated property) to ensure that your charitable gifts are stewarded to your best advantage.

Please reach out to your personal philanthropic advisor or our Philanthropic Strategy team with questions.

To learn more, please contact:

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Margita Labhard
Margita Labhard
Senior Director of Philanthropic Strategy

mlabhard@oc-cf.org
(949) 464-4510