The One Big Beautiful Bill Act (OBBBA) didn’t eliminate the charitable deduction—but it did rewrite the rules of the game. Who benefits, how much they benefit, and when they benefit now depends on a few new guidelines.
For professional advisors, there are three big changes to understand—and even bigger planning opportunities hiding inside them.
1. A New Deduction for Non-Itemizers
Taxpayers who take the standard deduction are now eligible for a tax benefit for charitable giving.
Non-itemizers may now deduct:
- Up to $1,000 (single filers) or
- Up to $2,000 (married filing jointly)
This applies only to cash gifts made directly to qualified 501(c)(3) public charities. Gifts to donor-advised funds and private foundations don’t qualify, and there’s no carryforward if the deduction isn’t used.
Why it matters:
Millions of households who previously gave with zero tax benefit now have one. It’s modest—but meaningful—and it opens the door to fresh charitable conversations with clients who may have felt “left out” before.
2. The “Floor Rule”: Itemizers Need to Clear the Bar
For clients who itemize, charitable deductions now come with a threshold.
Itemizers may deduct only the portion of their charitable gifts that exceed 0.5% of their Adjusted Gross Income (AGI).
Example: A client with $200,000 in AGI must give more than $1,000 before a charitable deduction begins to count.
Planning takeaway:
This rule makes bunching strategies more important than ever. By funding a donor-advised fund in a single year, a client can:
- Clear the AGI floor
- Take the full deduction in year one
- Support favorite charities over time with grants
3. The “Ceiling Rule”: A Cap on High-Income Deductions
High-income clients face a new limitation: the value of their charitable deduction is now capped at a 35% marginal benefit, even for those in the 37% bracket.
In practical terms, this means your most charitable clients may “lose” 2% of the deduction’s value unless they plan ahead.
One smart solution:
Spreading large gifts across multiple tax years can help maximize the usable deduction and soften the impact of the cap.
Other Important Things Advisors Should Know
- Qualified Charitable Distributions (QCDs) remain one of the most powerful tools available.
Clients over age 70½ can give up to $110,000 per individual (or $220,000 per couple) directly from IRAs. These gifts:
- Are excluded from a client’s taxable income
- Bypass both the floor and ceiling riles
- Are one of the most tax-efficient ways to give
- Through 2029, the new law raises the cap on how much you can deduct for state and local taxes (SALT) if you itemize.
The deduction limit increases from $10,000 to $40,000 for taxpayers with incomes under $500,000. Taxpayers with incomes between $500,000-$600,000, will receive a laddered benefit. This limit will increase 1% each year it’s active.
- For donors making cash gifts, the new law makes permanent the rule allowing cash gifts to qualified public charities to be deducted up to 60% of AGI, though it remains at 30% for appreciated assets.
- Corporations will feel the impact too.
Corporate charitable deductions now apply only to contributions exceeding 1% of corporate taxable income, encouraging businesses to bundle gifts into fewer years.
Using a corporate donor-advised fund can be an effective way to manage this shift.
So…What’s the Bottom Line?
Charitable planning is no longer just about how much a client gives.
It’s about when and how they give.
For advisors, that means charitable strategy should move closer to the front of the planning conversation—not treated as an afterthought. With the right timing and structure, clients can protect tax efficiency and amplify their philanthropic impact.
DuPage Foundation partners with professional advisors to help structure donor-advised funds, community endowment funds, and more. We have the tools and resources to support gifts of cash, appreciated assets, real estate, business interests, and other complex assets—so your clients can give back generously and effectively.
