What the One Big Beautiful Bill Act Means for Your Charitable Giving Strategy
The One Big Beautiful Bill Act (enacted in 2025) introduces several important tax changes for 2026. These updates create new incentives and new considerations for anyone looking to give strategically.
New Above-the-Line Charitable Deduction:
For the 90% of taxpayers who do not itemize, a new deduction allows:
· Up to $1,000 for single filers
· Up to $2,000 for couples filing jointly
This deduction reduces taxable income even if you take the stand deduction, making everyday generosity more tax-efficient.
New Adjusted Gross Income (AGI) Floors for Itemizers:
Beginning this year:
· Individuals must exceed 0.5% of Adjusted Gross Income (AGI) for their gift to be deductible
· Corporations face a 1 % AGI floor
These floors mean that smaller gifts may no longer provide a tax benefit for itemizers, making it more important to plan the timing and size of charitable contributions.
Estate Taxes and Gift Tax Exemption
· The federal estate and gift tax exemption rises to $15 million per person (indexed for inflation), meaning very few estates will owe federal estate tax.
· These laws differ from state to state. The threshold for state taxes might be lower depending on where you live.
· Non-cash giving vehicles (QCDs, Stocks, or grants from Donor-Advised Funds) remain powerful tools for maximizing impact while potentially reducing taxes.
· For donors with substantial estates, planned giving and legacy gifts may still offer meaningful tax and philanthropic advantages despite the higher exemption.
Why these Changes Matter
Together, these updates shift the charitable landscape in several ways:
· More non-itemizers can now benefit from giving.
· Itemizers may need to be more intentional about the size and timing of gifts.
· High-net-worth donors may find new opportunities to integrate philanthropy into estate and legacy planning.
· Non-cash gifts continue to offer some of the most efficient ways to support the causes you care about.
A Final Note
Tax laws are complex, and the right strategy depends on your personal financial picture. Consult your tax preparer, financial advisor or estate attorney to understand how these changes apply to you and how to structure your giving most effectively.