Key Charitable Provisions

OBBBA creates a new permanent above-the-line charitable deduction for non-itemizers, beginning in 2026. This deduction allows up to $1,000 for individuals and $2,000 for married couples filing jointly for cash gifts. Analysts estimate this could generate between $7 and $10 billion in new annual giving. For clients who take the standard deduction, this provision offers a straightforward incentive to incorporate philanthropy into annual tax planning.

At the same time, OBBBA imposes new limits on itemized charitable giving. Starting in 2026, donors who itemize will face a 0.5 percent of AGI floor. For example, if a taxpayer has an AGI of $100,000, the first $500 of charitable contributions would not be deductible. High-income taxpayers will also see a new ceiling, as itemized deductions (including charitable gifts) are reduced by 5.41 percent of either total itemized deductions or taxable income above the 37 percent bracket threshold, whichever is less. These provisions create incentives for wealthier donors to accelerate significant gifts into 2025 before the new restrictions take effect.

Corporate giving will also be affected. From 2026 forward, corporations must meet a 1 percent taxable income floor before charitable contributions can be deducted. This change is expected to reduce overall corporate giving by $4–5 billion annually, shifting more responsibility for charitable support to individuals.

Finally, OBBBA establishes a federal tax credit to take effect in 2027 for contributions to state scholarship granting organizations, creating a new planning opportunity for clients interested in supporting Jewish day schools and similar institutions.

Estate and Gift Tax Planning

Beginning in 2026, the estate and gift tax exemption will permanently increase to $15 million per spouse ($30 million per couple), indexed for inflation. This expanded exemption provides a valuable opportunity for families to explore trusts, intergenerational transfers, and philanthropic legacy planning. Advisors should revisit clients’ estate plans to ensure they align with both the new exemption levels and long-term charitable goals.

Broader Tax Provisions with Charitable Impact

The SALT deduction temporarily increases to $40,000 beginning in 2025 (reverting to $10,000 in 2030). This expansion will allow more taxpayers, particularly in high-tax  states, to itemize, making charitable deductions more valuable for them.
The standard deduction sees only a modest increase, continuing to limit the number of itemizers overall.
Expanded child tax credits and new deductions for seniors, tip income, and overtime income may increase disposable income for some clients, indirectly supporting philanthropic capacity.

Advisor Action Items

Encourage acceleration of major gifts in 2025 to maximize deductibility before new floors and ceilings apply.
Educate standard deduction filers about the new universal charitable deduction effective in 2026.
Revisit estate plans in light of the permanently expanded exemption, with a focus on integrating philanthropic objectives.
Advise clients in high-tax states to consider how the temporary SALT increase may enhance the value of charitable deductions.
Prepare nonprofits and corporate clients for a potential decline in corporate giving and the resulting shift toward individual donor strategies.

As with any significant tax and charitable planning, you should always carefully consider potential changes in the context of your client’s complete financial profile. The Associated’s professionals are ready to work with you and your clients on ways to help maximize the financial and charitable benefits of any charitable planning strategies.