Giving Tuesday 2025: Transitions and Tax Incentives

How will the One Big Beautiful Bill Act affect year-end charitable giving in 2025? While some donors have incentives to accelerate donations into the current taxable year, other donors benefit by deferring contributions to 2026. It’s time for taxpayers to build their Excel models and call their investment advisors. Details follow.

At least four OBBBA changes affect taxpayers’ incentives with respect to charitable contributions in 2025 and 2026. First, individual and corporate donors face new floors on deductible contributions, starting in 2026 (of 0.5% of AGI and 1% of taxable income, respectively). Second, individual nonitemizers can claim a limited above-the-line deduction for cash donations, again starting in 2026 (of $1,000 for single filers and $2,000 for joint filers, not indexed for inflation). Third, for high-earning individuals, the tax benefits of charitable contributions are capped at 35%, rather than 37%, again starting in 2026. And fourth, more individual filers will itemize deductions to claim benefits under the higher limitation on SALT deductions (which takes effect in 2025 and sunsets after 2029), with countervailing pressure from moderate (and now permanent) increases in the standard deduction over the TCJA baseline for 2025.

Changes one and three encourage bunching deductions into 2025 for itemizers, while change two encourages nonitemizers to defer deductions into 2026. Change four affects whether—and which—filers itemize in both 2025 and 2026. Some donors may consider longer-term incentives with respect to the SALT deduction’s sunset in 2030, the fact that Congress made permanent both the 60%-of-AGI limitation on cash gifts to public charities and the TCJA’s higher exemption for estate taxes, and the new tax credit for donations to organizations that give scholarships for elementary and secondary education. There are lots of pressures in lots of directions. Expect longer-than-usual hold times at donor advised funds this holiday season.

Laura Saunders, How the Megabill Changes 2025 Tax Breaks for SALT and Charity, Wall St. J. (Nov. 28, 2026):

For 2026, in a permanent change long sought by charities, givers who don’t itemize will be able to deduct up to $1,000 (single filers) or $2,000 (joint filers) for donations to qualified charities. . . .

As a result, nonitemizers may want to delay 2025 cash donations into 2026 to get a deduction, says [Eric] Bronnenkant[, head of tax at Edelman Financial Engines].

Other major changes to donation rules will likely prompt donors of larger amounts to accelerate giving into this year.

In 2026, itemizers deducting charitable gifts lose an amount equal to 0.5% of their adjusted gross income. So if a couple has $200,000 of AGI, they’ll get a deduction only for amounts above $1,000—whether their total donations are $2,500 or $25,000.

What about donors who want a full tax deduction this year but aren’t ready to disburse the entire amount? Here a donor-advised fund (DAF) could come in handy. Givers could make a large gift to a DAF, get the deduction this year, and choose recipients later on.

Also starting next year, the highest-income filers will get a benefit of only 35% for itemized deductions rather than their top rate of 37%. That will reduce the value of charitable deductions by 5.4% for these filers, according to San Francisco CPA Richard Pon. So DAFs could be useful here as well.

A final word to senior donors: None of the megabill’s changes to charitable deductions apply to qualified charitable distributions, or QCDs. For charitably inclined donors age 70½ or older who have traditional IRAs, making gifts of IRA funds via QCDs is often the most tax-efficient way to donate.

Maureen Leddy, How the OBBB Impacts Year-End Charitable Giving, Checkpoint News (Nov. 11, 2025):

For [Joe] Phoenix[, CEO of Givinga, a financial technology company focused on philanthropy], the OBBB changes recall the uncertainty that followed the 2017 Tax Cuts and Jobs Act, which significantly raised the standard deduction[, which now is permanent under the OBBBA]. While charitable giving initially dipped, he explained, it recovered strongly in subsequent years, which he attributes to the “American giving mentality.”

Emily Kraschel & Erica York, Changes to Charitable Giving Under the One Big Beautiful Bill Act, Tax Foundation (Nov. 10, 2025):

The OBBBA makes permanent and expands the Tax Cuts and Jobs Act’s (TCJA) temporary increase to the standard deduction. . . .

[The] Tax Foundation estimates nearly 86 percent of taxpayers will take the standard deduction in 2026, an increase from projections under TCJA policy.

Taxpayers who take the standard deduction have not typically been able to deduct their charitable donations on their tax returns. The OBBBA, however, creates a permanent above-the-line deduction for charitable donations of $1,000 per filer who takes the standard deduction beginning in tax year 2026.

A similar policy was temporarily made available during the pandemic, supplying a $300 deduction per filer for non-itemizers. At that time, 29.4 percent of filers who used the standard deduction opted to take it, indicating that the OBBBA’s even larger deduction could be popular. . . .

The above-the-line deduction for non-itemizers will reduce revenue by about $74 billion from 2025 through 2034, while the new [0.5% of AGI] floor on charitable deductions for individuals will raise $63 billion, indicating a near wash in terms of the overall revenue effects of these two changes. In the near term, the delay in new limitations is likely to drive frontloading of donations.

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