Tax Implications on Giving from the One Big Beautiful Bill
This new Bill will immediately impact giving in our country, and we're breaking down what's most relevant here:
Charitable giving has reached record-breaking levels in recent years and we anticipate that this trend will continue! While Trump’s bill has proposed new changes, we find that they are mostly modest adjustments to the foundational rules that have been in existence for giving. Based on what we know now, we can make the most of 2025 — by prioritizing major gift conversations, accelerating campaign commitments, and laying the groundwork for broad-based outreach in 2026. A clear vision and the articulation of meaningful outcomes will continue to inspire generosity, especially when guided by an awareness of timely planning. Bonus: DAF giving might be a tremendous positive to next year’s philanthropy scene; more to come on that!
Universal Charitable Deduction Expanded
Currently, only those who itemize deductions (as opposed to taking the standard deduction) can deduct charitable contributions; these are typically high-income earners and make up less than 15% of the U.S. population. Starting in 2026, however, all taxpayers will be able to deduct charitable gifts, not just those who itemize.
The provision will allow for non-itemizing taxpayers to deduct up to $2k annually (joint, married) and $1k annually (individual filers).
This will be great for motivating younger and lower-to-middle income donors who didn't previously itemize (primarily new, modest donors).
Donor-Advised Fund (DAF) gifts will be excluded from the new non-itemizer deduction.
TAKEAWAY:
Begin preparing now for a broader donor outreach strategy in 2026. Develop messaging that appeals to first-time and modest donors. Create targeted, segmented appeals and recurring giving programs that emphasize how even small gifts now come with real tax advantages – keeping in mind that all generations of donors respond to appeal content and vehicles (email, mail, social media, peer-to-peer) differently!
Individuals: tension between AGI cap, new threshold ("floor") plus top-tax-bracket deductions:
Remaining the Same: Deductions are limited to a percentage of a donor’s income (AGI = adjusted gross income). The new law permanently extends the existing ability to deduct up to 60% of AGI for cash contributions to public charities. This encourages larger, one-time cash gifts, particularly after triggering events (liquidity events) — one can fund the majority or entirety of a pledge this year and receive all of the tax benefits now while in a particularly positive financial circumstance.
Might encourage accelerated pledge payments for campaigns, especially if intentionally trying to reduce taxable income after an event.
A new deductions floor / minimum threshold (starting in 2026) will mean that donors must now give above a certain percentage of their income before they can deduct anything.
How does this work? Gifts must exceed a certain percentage of their AGI (.5%), so for a donor who has $300k in AGI in 2026, she can only deduct gifts in excess of $1500.
What will this do? It may encourage new donor behavior. Multi-year pledges and spreading out charitable gifts over multiple years can become less appealing than larger one-time gifts to campaigns, or big gifts over a shorter period such as 2-years to maximize tax advantages.
Adjusted slightly: The bill caps (starting in 2026) the tax benefits of itemized charitable deductions at 35%, even for those in the wealthiest 37% marginal tax bracket. Currently, the max tax benefit per dollar given is up to 37% and is based on tax bracket, so this change is not very significant and will not impact all donors. Let’s look at an example of a high-income filer: someone making $750k per year who donates $15k per year, will receive a tax benefit of $0.35 on the dollar and have a total tax savings of $5,250, which is $300 less than the total tax savings of $5,550 (from $0.37 on the dollar under current law; as you can see, this will only be very impactful if the gift is quite substantial).
TAKEAWAY:
Encouraging gifts in 2025 will allow for donors to take advantage of certain tax benefits before new laws change things in 2026; donors may be more motivated at year-end than previous years to fulfill pledges on an accelerated timeline or make larger gifts to campaigns in one outright gift. While we acknowledge that the floor will be new to donors, we believe the 35% cap is not significant enough to truly impact major gifts.
Corporations
We know that corporations only make up about 7% of the country's entire charitable giving in one year. When we talk about campaigns, we primarily focus on individuals, families, and foundations.
Minor adjustment: Businesses can still deduct up to 10% of their taxable income, but there is now a 1% floor — meaning only contributions exceeding 1% of taxable income will be eligible for tax relief. This might discourage small, routine corporate gifts but may encourage or inspire larger gifts.
TAKEAWAY:
Refocus corporate engagement efforts on meaningful, high-visibility partnerships that justify larger contributions. Engage businesses around bigger gifts tied to measurable impact, employee engagement, or brand alignment. Prepare now for a potential dip in small corporate donations that will be less tax-attractive. Remember with corporations: a clear value-exchange is typically a major motivator!
DAF / Foundation Reform
Positive change: The goal is to move money faster into the hands of healthy + ready nonprofits. We will likely see:
Tightening of private foundation rules to limit loopholes for family member salaries and travel reimbursements, as examples;
Incentivizing DAF giving with tax benefits linked to time constraints on gifts being directed, for example, within 15-years, and a required annual percentage payout (such as 5%, like foundations) for funds over a certain amount.
TAKEAWAY:
Get DAF-ready. Strengthen relationships with donors who you know use DAFs by emphasizing readiness and responsiveness. Position your organization as a strong candidate for near-term deployment of philanthropic capital. Consider DAF-centric appeals and challenges to inspire more gifts from these funds in short order!
We're optimistic that the more organizations continue to frame campaigns around the bold visions they have and the tangible outcomes they are driving, donors will continue to be inspired to invest. It's important that we take advantage of the remainder of 2025 to encourage / consider major gifts and some accelerated campaign commitment payments. In 2026, there will be opportunities to think creatively with donors (and as philanthropists) about how and why different vehicles to support nonprofits might be considered. Given the incentives for modest gifts, broader communications should inspire a new pool of donors next year which will help in donor pool depth and with future campaigns.
Onward and upward!
