Charitable Giving and the New Tax Law-FAQ: Charitable Giving Provisions in the OBBBA

FAQ: Charitable Giving Provisions in the OBBBA

Pdf Summary

The One Big, Beautiful Bill Act (OBBBA), effective starting with the 2026 tax year, introduces five key provisions affecting charitable tax deductions:<br /><br />1. A permanent charitable deduction is established for non-itemizing taxpayers, allowing up to $1,000 for individuals ($2,000 for joint filers) in cash donations, but excluding gifts to donor-advised funds (DAFs), supporting organizations, and private foundations.<br /><br />2. A new floor requires itemizing taxpayers to exceed 0.5% of Adjusted Gross Income (AGI) before deducting charitable contributions, including non-cash gifts.<br /><br />3. A 35% cap limits the total value of all itemized deductions for taxpayers in the highest (37%) tax bracket, reducing tax savings for high-income donors.<br /><br />4. Corporations face a new 1% floor on charitable contributions with deduction limits remaining between 1% and 10% of taxable income, applicable only to C corporations.<br /><br />5. The 60% of AGI limitation on cash gifts, previously made temporary by the 2017 Tax Cuts and Jobs Act, is now permanently extended.<br /><br />These changes encourage donors, especially itemizers, to "bundle" or "bunch" donations to exceed thresholds and maximize deductions, particularly important before the rules take effect. Non-itemizers cannot deduct donations to DAFs under the new rules.<br /><br />Additionally, excise taxes on certain private college and university endowments increase with a tiered tax rate based on endowment value per student, but only apply to private institutions with more than 3,000 tuition-paying students and significant endowment values. Public institutions and private K-12 schools are exempt. The threshold change reduces the number of colleges subject to this tax, and religiously affiliated institutions meeting criteria are still taxed.<br /><br />Overall, the OBBBA creates new limitations and structures that may increase the cost of charitable giving for high-income individuals and corporations, while providing new, permanent incentives for non-itemizers, with significant implications for donor strategies starting in 2026 and prompting potential accelerated giving in 2025.

Keywords

One Big Beautiful Bill Act

OBBBA

charitable tax deductions

non-itemizing taxpayers

itemizing taxpayers

Adjusted Gross Income floor

itemized deduction cap

corporate charitable contributions

AGI cash gift limitation

private college endowment tax