The One Big Beautiful Bill (OBBB) introduces significant changes to charitable giving rules beginning in 2026. Here’s what you need to know as you plan your year-end contributions.
What’s Changing in 2026?
- New Deduction Floor
Only individual contributions that exceed 0.5 percent of modified adjusted gross income (AGI) will be deductible (1% floor for corporations). For example, if your AGI is $500,000 the first $2,500 of your contributions will be non-deductible ($5,000 for corporations). - Cap on Tax Benefit
Charitable deductions will be limited to a maximum tax deduction of 35 percent, even if you’re in the highest tax bracket (currently 37 percent). This means charitable giving will no longer fully offset top-bracket income. - Non-itemizers
Beginning in 2026, those that take the standard deduction and do not itemize their deductions will be eligible for a $1,000 above the line deduction ($2,000 for married couples filing jointly) for cash donations.
Planning Opportunities for 2025
- Accelerate Planned Giving
If you were considering a significant gift in 2026, think about making it in 2025 instead. - Bundle Donations
Combine multiple years of smaller donations into one larger gift in 2025 to ensure full deductibility. - Consider a Donor-Advised Fund
This option allows you to take a deduction now without immediately designating a specific charity. It is ideal if you plan to give over future years but do not have a specific charity in mind. The future gifts would not be deductible as the deduction is taken in 2025. - Donate appreciated stock
Donating appreciated securities that has been held at least one year affords the opportunity to get a full deduction for the value of the security without incurring tax on the gains
If charitable giving is part of your financial plan, consider accelerating contributions into 2025 to maximize your deduction under current rules before the new rules take effect. Keep in mind that any amounts exceeding the deductible limit for 2025 will carry forward to 2026 and be subject to the new restrictions. Before making changes, consult your tax advisor to ensure the best strategy for your situation.
Windham Brannon Helps You Navigate Charitable Giving Changes
The OBBB introduces important changes that will impact charitable contribution deductions starting in 2026. These updates create both challenges and opportunities for taxpayers, making proactive planning essential. Windham Brannon’s tax professionals understand the complexities of these new rules and are ready to help you optimize your charitable giving strategy while minimizing tax implications.
For questions or more information, contact your advisor today or reach out to Andrea Bonaccorsi or Doug Neal.
