The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, has brought significant changes to the tax landscape—including some important shifts that affect charitable giving. While the law made permanent many provisions from the 2017 Tax Cuts and Jobs Act, it also introduced new rules that require donors to think strategically about their philanthropy.
If you’re someone who regularly supports charitable causes, understanding these changes and adjusting your giving strategy could save you thousands of dollars in taxes while maximizing your impact on the organizations you care about.
What Changed for Charitable Giving?
The OBBBA introduced three key provisions affecting charitable contributions:
- Non-Itemizer Charitable Deduction (Starting 2026) Beginning next year, even if you don’t itemize deductions, you can claim a charitable deduction for cash contributions—up to $1,000 for single filers and $2,000 for married couples filing jointly. Note that donations to donor-advised funds don’t qualify for this deduction.
- New AGI Floor for Itemizers (Starting 2026) If you do itemize, there’s a new hurdle: you can only deduct charitable contributions that exceed 0.5% of your adjusted gross income (AGI). For someone with $1 million in AGI, that means the first $5,000 in donations won’t be deductible.
- Overall Itemized Deduction Limitation (Starting 2026) For taxpayers in the top 37% tax bracket, the benefit from all itemized deductions—including charitable contributions—will be capped at 35%.
These changes mean that charitable giving in 2026 and beyond will be less tax-advantaged than it is today. But there’s good news: with smart planning, you can still maximize your tax benefits while supporting the causes you believe in.
Four Powerful Charitable Planning Strategies
Strategy #1: Accelerate Your Giving Into 2025
If you’re planning to make charitable contributions over the next several years, consider “bunching” them into 2025 before the new restrictions take effect.
Real-World Example: A married couple with $1 million in AGI who typically donates $50,000 annually could save an additional $11,500 in federal taxes by contributing five years’ worth of donations ($250,000) in 2025 instead of spreading them out from 2025-2029.
Here’s the math:
- Spreading $50,000 annually over five years: $81,500 total tax benefit
- Bunching $250,000 in 2025: $92,500 total tax benefit
- Extra savings: $11,000
The key advantages of giving in 2025:
- No 0.5% AGI floor to clear
- Full 37% tax benefit instead of the capped 35% rate starting in 2026
Strategy #2: Donate Appreciated Securities Instead of Cash
One of the most underutilized charitable giving strategies is donating long-term appreciated securities directly to charity rather than selling them and donating cash.
Why this works: When you donate appreciated stock, bonds, or mutual funds you’ve held for more than a year, you receive a tax deduction for the full fair market value AND avoid paying capital gains tax on the appreciation.
Real-World Example: Consider a stock position worth $100,000 that a couple in the 37% tax bracket purchased for $10,000:
- Selling and donating cash: The couple would pay $21,420 in capital gains taxes (20% federal rate plus 3.8% net investment income tax on the $90,000 gain), leaving a net tax benefit of just $15,580.
- Donating the stock directly: The couple would get the full $37,000 tax deduction (at 37% rate) with no capital gains tax.
- Net additional savings: $21,420
This strategy is particularly powerful for highly appreciated positions in your portfolio that you’d like to rebalance anyway.
Strategy #3: Use a Donor-Advised Fund for Flexibility
Want to bunch your contributions to maximize 2025 tax benefits but aren’t ready to decide which charities to support right away? A donor-advised fund (DAF) offers the perfect solution.
How it works:
- You make a large, irrevocable contribution to a DAF in 2025
- You receive an immediate tax deduction for the full amount
- The assets can be invested and grow tax-free
- You recommend grants to your favorite charities over time—next year, in five years, or even decades from now
The advantages:
- Immediate tax deduction for accelerated giving
- Time to thoughtfully consider which organizations to support
- Potential for tax-free growth of assets before they’re granted out
- Can donate cash or appreciated securities
- Simplified recordkeeping (one tax receipt instead of many)
A DAF is essentially a charitable savings account that lets you separate the timing of your tax deduction from the timing of your gifts to specific charities.
Strategy #4: Qualified Charitable Distributions (QCDs) for IRA Owners
If you’re 70½ or older and have an IRA, qualified charitable distributions offer unique tax advantages—especially in states like Connecticut that don’t allow itemized deductions for charitable contributions.
How QCDs work: You direct your IRA custodian to transfer funds directly from your IRA to a qualified public charity. The distribution counts toward your required minimum distribution (RMD) if you’re 73 or older, but the amount is excluded from your taxable income entirely.
Real-World Example (2026): A married couple residing in Connecticut with $1 million in AGI, that is in the 37% Federal marginal bracket and the 6.99% Connecticut marginal bracket making a $100,000 charitable contribution:
Using a QCD:
- Federal tax benefit: $37,000 (37% on the full $100,000 excluded from income)
- Connecticut tax benefit: $6,990 (6.99% on the full $100,000 excluded from income)
- Total benefit: $43,990
Using a cash contribution:
- Federal tax benefit: $33,250 (35% on $95,000 after AGI floor)
- Connecticut tax benefit: $0 (no itemized deduction allowed)
- Total benefit: $33,250
Extra savings with QCD: $10,740
For 2025, you can contribute up to $108,000 per person through QCDs. If you’re married, your spouse can contribute an additional $108,000 from their own IRA.
Taking Action: What Should You Do Now?
With these new rules taking effect in 2026, the fourth quarter of 2025 presents a critical planning window. Here are the key steps to consider:
- Review your giving goals: How much do you plan to donate over the next 3-5 years?
- Evaluate acceleration opportunities: Would bunching multiple years of contributions into 2025 make sense for your situation?
- Audit your investment portfolio: Identify highly appreciated securities that could be donated instead of sold.
- Consider establishing a DAF: If you want flexibility in your giving timeline while capturing 2025 tax benefits.
- Explore QCDs: If you’re taking RMDs from an IRA, this strategy could provide significant federal and state tax savings.
- Consult with your advisors: Work with your financial advisor, CPA, and estate planning attorney to model the tax impact of different giving strategies for your specific situation.
The Bottom Line
The One Big Beautiful Bill Act has changed the charitable giving landscape, but thoughtful planning can help you maintain—or even enhance—the tax efficiency of your philanthropy. By taking action before year-end 2025, you can lock in more favorable tax treatment while supporting the causes that matter most to you.
The key is to act strategically and soon. The difference between reactive and proactive charitable planning could mean thousands of dollars in additional tax savings—money that could go toward supporting even more of the charitable work you believe in.