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The New Charitable Giving Rules

Posted on by Whittaker

The Clock Is Ticking on Pre-OBBBA Charitable Giving Rules

The One Big Beautiful Bill Act (OBBBA), passed in 2025, reshapes the way individuals and corporations deduct charitable contributions. For donors and business owners, December 31, 2025, marks the final opportunity to give under the old, more favorable rules.

This isn’t just about taxes — it’s about aligning your values with your legacy while keeping more of what you give.

How Charitable Giving Worked Before OBBBA

Before 2026, the charitable giving rules were straightforward and generous:

  • Individuals could deduct cash gifts up to 60 percent of AGI.

  • Gifts of appreciated assets, like stock, were limited to 30 percent of AGI.

  • Corporations could deduct up to 10 percent of taxable income for qualified contributions.

  • No minimum giving “haircut” applied, meaning every dollar over the limit counted.

  • Donor-Advised Funds (DAFs) were a popular tool for both individuals and businesses.

What Changes in 2026

Starting January 1, 2026, the landscape shifts significantly.

New 0.5% AGI Floor

Individuals will only be able to deduct charitable contributions that exceed 0.5% of Adjusted Gross Income (AGI).

For example:
If your AGI is $600,000, the first $3,000 of your giving won’t qualify for a deduction. A $30,000 donation would yield a deduction of only $27,000 — cutting your tax savings by about $1,050 at a 35% tax rate.

Corporate Giving Cap Slashed to 1%

Corporations face an even more dramatic change: the deduction limit drops from 10% to 1% of taxable income.

  • 2025: $5 million in taxable income → $500,000 deductible.

  • 2026: same income → only $50,000 deductible.

Businesses will also encounter both a floor and ceiling: the first 1% is non-deductible, amounts between 1% and 10% are deductible, and any excess can be carried forward — but only if the floor is met.

Return of Itemized Deduction Phaseouts

High-income households will again face itemized deduction phaseouts, meaning charitable deductions will reduce in value as income rises.

Above-the-Line Deduction for Non-Itemizers

For employees and moderate-income households, a $2,000 above-the-line deduction becomes available, encouraging smaller gifts and potential employer matching programs.

The Impact: More Giving, Less Deduction

Under OBBBA, generous donors will see their deduction value shrink. The government’s “haircut” and corporate caps reduce how much giving translates to tax savings.

For families and business owners, timing has never mattered more.

Strategies to Maximize 2025 Charitable Giving

The months leading to year-end 2025 present a rare window to secure higher deductions before OBBBA takes effect.

1. Accelerate Contributions in 2025

Make planned 2026 gifts before December 31, 2025. This strategy, known as “bunching”, allows taxpayers to stack multiple years of giving into one tax year to maximize deductions.

Example:

  • $60,000 donated in 2025 = ~$21,000 in tax savings.

  • $30,000 per year (2025 and 2026) = ~$20,213 in total savings.

That’s an extra $787 saved by giving earlier.

2. Use Donor-Advised Funds (DAFs)

A DAF allows you to contribute and deduct the full amount now, while distributing funds to charities over time. It’s an ideal strategy for both individuals and corporations wanting to “lock in” 2025’s favorable rules.

3. Plan Corporate Giving Early

Corporations should review giving budgets before year-end. Consider:

  • Pre-funding DAFs for multi-year giving programs.

  • Adjusting matching programs or charitable initiatives now to take advantage of the 10% cap.

4. Consider Non-Cash Gifts

Donations of appreciated stock, privately held business interests, or cryptocurrency can provide additional tax efficiency.

Married Couple Example

A couple earning $450,000 annually and donating $30,000 per year will see this difference:

  • 2025: Full $30,000 deductible.

  • 2026: Only $27,750 deductible.

  • Lost tax savings: Approximately $787.

Over time, that lost deduction adds up — especially for those who give consistently.

3-Month Countdown: Act Before Year-End

From September 30 to December 31, 2025, there are just 92 days to finalize charitable giving under current rules. Delays may mean missed deductions or reduced tax benefits.

Action Steps for 2025

  1. Maximize charitable gifts before December 31, 2025.

  2. Open or fund a Donor-Advised Fund.

  3. Coordinate with your CPA or financial advisor to align tax and giving strategies.

  4. Adjust corporate giving programs now to lock in the 10% cap.

  5. Model future giving under the new rules to plan sustainable philanthropy.

The Bottom Line

The OBBBA charitable giving changes mark one of the most significant shifts in decades. After 2025, charitable dollars will go further in community impact than on your tax return. Acting now ensures that your generosity delivers the greatest financial benefit.

Give with intention. Act with impact.

If you want to learn more about other OBBBA changes then check out this blog post: https://www.whittakercpas.com/new-depreciation-rules-with-the-passing-of-obbba/?preview_id=2435&preview_nonce=794c1b5ec1&post_format=standard&_thumbnail_id=2436&preview=true

Whittaker