Charitable giving allows business owners to support their communities while receiving meaningful tax benefits. With the passage of the One Big, Beautiful Bill Act (OBBBA) in July 2025, new rules impact how businesses and their owners can deduct contributions. By understanding these changes, you can make the most of your generosity while reducing tax liability.
How Strategic Donations Reduce Taxes
Corporate Deduction Limits
Corporations still face a 10 percent deduction limit on charitable contributions, based on taxable income before net operating losses and special deductions. Unused contributions may be carried forward for up to five years, giving businesses added flexibility in planning donations across profitable years.
The New 0.5 Percent AGI Floor for Individuals
Starting in 2026, individuals can only deduct charitable contributions once they exceed 0.5 percent of Adjusted Gross Income (AGI). This new floor impacts business owners with pass-through income, effectively raising the threshold before deductions apply. For high earners, timing and structuring contributions will be more important than ever.
Ordering Rules and AGI Limits
OBBBA reinforces existing ordering rules under IRC §170. Cash contributions remain deductible up to 60 percent of AGI, while contributions of appreciated property are limited to 30 percent of AGI. Amounts exceeding these limits may be carried forward for five years, preserving future opportunities for tax savings.
Strategies to Maximize Charitable Deductions
Donate Appreciated Assets
Contributing assets like stock or real estate allows you to deduct the fair market value while avoiding capital gains tax. This strategy remains one of the most tax-efficient ways to give.
Time Donations Before the New Floor
Because the 0.5 percent AGI floor begins in 2026, larger gifts made in 2025 may yield greater deductions before the new limit applies.
Use Donor-Advised Funds (DAFs)
DAFs allow you to “bundle” contributions into one tax year, helping you clear the new AGI floor while spreading gifts to charities over time.
Explore Corporate Sponsorships
When structured correctly, sponsorships may qualify as deductible business expenses rather than charitable contributions. This approach can bypass AGI limits and provide added flexibility.
Align Giving With Tax Planning
Charitable giving interacts with other tax provisions such as the Qualified Business Income (QBI) deduction and limits on itemized deductions. Coordinating with your CPA ensures donations strengthen both your tax efficiency and your wealth-building goals.
The Bottom Line
The OBBBA adds new complexity to charitable giving, but business owners who plan ahead can still maximize tax savings. By donating appreciated assets, timing gifts strategically, and using tools like DAFs, generosity can benefit both your business and your bottom line.
At Whittaker CPAs, we help business owners design giving strategies that align with the latest tax laws and support long-term financial growth. With the new OBBBA rules, the right approach can make your charitable impact go even further.
To learn more about the new OBBBA click the link here: https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors
