The One Big Beautiful Bill Act was signed into law by President Trump on July 4, 2025, after the House of Representatives approved the Senate’s changes to H.R. 1, which passed the House by a narrow margin in May.
The OBBBA, with nearly 900 pages of provisions, reshapes policy across major sectors of the U.S. economy. Included in the OBBBA are several provisions that impact philanthropy. Three major takeaways are of particular importance as the community foundation helps donors, fund holders, and nonprofits – as well as attorneys, CPAs, and financial advisors – navigate charitable planning opportunities over the months and years ahead.
Insight #1: Standard deduction goes higher
What’s in the OBBBA?
The new law makes permanent the standard deduction increases under the Tax Cuts and Jobs Act of 2017 (TCJA), increasing the standard deduction for 2025 to $15,750 for single filers and $31,500 to taxpayers who are married and filing jointly. The new law also expands the “bonus” deduction for taxpayers 65 and older through 2028.
What’s more, under the new law, individuals who itemize may take charitable deductions only to the extent the charitable deductions exceed 0.5% of adjusted gross income. Furthermore, taxpayers in the top bracket can only claim a 35% tax deduction for charitable gifts instead of the full 37% that would otherwise apply to their income tax rate. Note also that the final bill extended the 60% adjusted gross income contribution limitation for cash gifts made to certain qualifying charities.
What does this mean for charitable giving?
With even fewer taxpayers eligible to itemize, and deductions capped for high-income earners, we may see a chilling effect on charitable giving, similar to what occurred in the wake of the TCJA. However, this also reinforces the benefits of “bunching” multiple years of charitable donations into a Donor Advised Fund at the community foundation. Bunching charitable donations is a tax strategy that involves consolidating multiple years’ worth of charitable contributions into a single tax year to maximize the tax benefits.
What can you do?
As you work with your charitably minded clients, remember that people do not give to charity solely to secure a tax deduction. Keep in mind that many other factors motivate charitable giving, and philanthropy is an important priority for many families. Several studies confirm that tax benefits are not the main driver of charitable giving for most, and that affluent clients expect that philanthropy is part of their overall financial planning discussions.
Insight #2: Deduction for non-itemizers
What’s in the OBBA?
The new law includes a provision, effective after 2025, allowing non-itemizers to take a charitable deduction of $1,000 for single filers and $2,000 for taxpayers who are married and filing jointly. As has been the case in the past, gifts to donor-advised funds are not eligible. Unlike a previous (but smaller) similar provision, though, this law is not set to sunset.
What does this mean for charitable giving?
After the TCJA went into effect, households that itemize deductions dropped to under 10%. The OBBBA’s deduction for non-itemizers has the potential to re-motivate charitable giving among a significant number of households.
What can you do?
Make sure you talk about charitable giving with your clients who don’t itemize; a $1000 or $2000 deduction could be just the motivation they need to begin a journey of philanthropy.
Insight#3: No sunsetting estate tax exemption
What’s in the OBBA?
For affluent taxpayers updating financial and estate plans, the last couple of years have been a roller coaster because of the looming possibility that the TCJA’s increase to the estate tax exemption would sunset at the end of 2025. Finally, there is clarity: Under the OBBBA, the sunset will not happen. The new law makes permanent the increase in the unified credit and generation-skipping transfer tax exemption threshold. The 2025 exemption is $13.99 million per person.
What does this mean for charitable giving?
Purely estate tax-based incentives to give to charity continue to apply only to the ultra-wealthy, likely resulting in a continuation of the taxpayer behavior triggered by the TCJA. In other words, most people will give to charity during their lifetimes and in their estates for reasons other than a tax deduction.
What can you do?
The upshot of the new law is that high net-worth taxpayers now have more time to thoughtfully consider estate planning strategies, including charitable giving.
We always encourage donors to first seek the advice of their legal, financial, or tax advisors when considering a gift of non-cash assets. While our team does not offer tax advice, we stay knowledgeable on charitable giving strategies. Please contact Colleen Hill, Vice President of Development & Donor Services, at chill@cfhz.org or by calling 616–994–8853 if we can help you serve your clients.