Starting January 1, 2026, many aspects of the new tax legislation (commonly referred to as the One Big Beautiful Bill Act or OBBBA) goes into effect that could reshape how you support the causes you care about. These changes include preserved incentives for charitable giving and new opportunities to make your contributions go further—both for you and the organizations you support.
If You Don’t Itemize: New Benefits You Should Know About
Most Americans—about 90%—use the standard deduction when filing taxes. The new law continues to support these taxpayers with enhanced deductions and new giving options.
Here’s what’s changing:
- Standard Deduction Extended: For 2025, the standard deduction is $15,750 for individuals and $31,500 (up from $30,000 pre-OBBBA) for married couples filing jointly. These amounts will be adjusted annually for inflation.
- New Deduction for Charitable Giving: Starting in 2026, if you are a non-itemizer, you can take an above-the-line deduction of up to $1,000 (individuals) or $2,000 (married couples) from your income for charitable donations.
Note: To qualify for this deduction, donations must go directly to a charity. Contributions to donor advised funds are excluded from this particular deduction.
- Smart Giving with Non-Cash Assets: While these gifts can be made with cash, you may want to consider using appreciated assets like stocks to maximize this benefit.
If You Itemize: Key Changes That Could Affect Your Strategy
For those who itemize deductions, several important updates are coming that may impact your giving plans.
- 60% AGI Limit Made Permanent: You can continue to deduct cash gifts to public charities up to 60% of your adjusted gross income (AGI).
- New Minimum Threshold for Deductions: Starting in 2026, only donations that exceed 0.5% of your AGI will count toward a deduction. For example, if you earn $200,000, only donations over $1,000 will qualify as a charitable deduction.
Tip: Due to this change, it may be beneficial to accelerate charitable donations before the end of 2025. One strategic approach is to contribute to a DAF this year, allowing you to claim the full deduction now while maintaining the flexibility to distribute funds to charities over time.
- Reduced Deduction for High Earners: This one is a little more complex but in simple terms, currently top earners who itemize can deduct 37 cents for every dollar donated. In 2026, the tax benefit for itemized deductions is capped at 35 cents per dollar.
Tip: If you're in a higher tax bracket, think about completing large gifts or pledge payments or funding your DAF before the change takes effect.
- Changes for Businesses: Businesses are impacted by these charitable changes too. Starting in 2026, corporations will face a 1% floor on philanthropic donations.
Tip: Given each business’ unique cash flow situation, it might be beneficial for them to make larger donations in 2025.
Estate and Gift Tax Planning
The law also locks in the federal estate and gift tax exemption in 2026 at $15 million per individual (or $30 million per couple), with inflation adjustments. This allows more of your estate to be passed on tax-free to beloved individuals and charities. While this exemption is defined as permanent, these provisions and others could be subject to change under future administrations.
Make the Most of Your Giving
For now, there is some clarity on the provisions of the new Act. There are a few months before year end to proactively consider the most effective ways to reduce your tax burden while supporting causes that matter to you. Now is a great time to review your giving strategy. Be sure to consult your tax advisor to plan ahead and make the most of these new opportunities in 2025 and beyond.
Mindy Hirt is a member of the Jewish Federation of Greater Nashville’s Professional Advisory Council. She can be reached at mhirt@argenttrust.com
The Jewish Observer is published by The Jewish Federation of Greater Nashville and made possible by funds raised in the Jewish Federation Annual Campaign. Become a supporter today.
