As the end of the year approaches, many people begin thinking about philanthropy. While planning your charitable giving, be sure to consider the potential impact of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4.

Several provisions of this new law could affect the tax deductibility of your charitable gifts. Let’s look at some key changes made by the OBBBA and explore some strategies to help maximize the tax efficiency of your giving.

Above-the-line deductions

Starting with the 2026 tax year, the OBBBA restores the expired COVID-era “above-the-line” charitable deduction for non-itemizers and increases it to $1,000 for single filers and $2,000 for joint filers (up from $300 and $600, respectively). That means you don’t have to itemize deductions to enjoy the tax benefits of charitable giving. Note, however, that this deduction isn’t available for contributions to donor-advised funds or donations to private nonoperating foundations.

Potential strategy: If you’re among the 90% or so of taxpayers who don’t itemize, consider putting off charitable gifts until early next year to take advantage of above-the-line deductions.

Note: Effective in 2027, the OBBBA also establishes a tax credit of up to $1,700 for donations to specific organizations that grant scholarships to K–12 schools.

New floor on itemized deductions

For itemizers, starting in 2026, you’ll be able to deduct qualified charitable donations only to the extent they exceed 0.5% of your adjusted gross income (AGI). So, for example, a married couple with an AGI of $400,000 can deduct charitable donations only if the value of those donations exceeds $2,000.

Potential strategy: Consider making large charitable donations this year, before the 0.5% floor kicks in. Going forward, you can maximize your deductions by “bunching” them — that is, making larger charitable gifts less frequently.

Suppose the married couple from our previous example typically donates $10,000 per year to charity. The floor limits each deduction to $8,000 — $16,000 over a two-year period. If, instead, they donate $20,000 every other year, their deduction for the same two-year period will increase to $18,000.

Note: A donor-advised fund can help you implement a bunching strategy. You can bunch contributions to the fund into a single tax year to maximize your tax benefits while still timing your charitable gifts as you see fit.

Reduced benefits for top bracket

Starting in 2026, for taxpayers in the highest tax bracket (37%), the OBBBA limits the value of all itemized deductions — including charitable deductions — to 35%. Under current law, for someone in the 37% bracket, a $10,000 deduction translates into $3,700 in tax savings. Beginning next year, the same deduction will generate only $3,500 in tax savings.

Potential strategy: Donors in the top tax bracket may want to consider accelerating significant planned charitable gifts into 2025 to maximize their deductions before the new limit takes effect.

Increased limit for some cash gifts

Charitable deductions in a given tax year are limited to a certain percentage of AGI, with the excess carried forward for up to five years. Historically, cash gifts to public charities have been limited to 50% of AGI, and gifts of appreciated long-term capital assets (such as stock or real estate held for more than one year) to such charities have been limited to 30% of AGI. Lower limits apply for gifts to private foundations. The Tax Cuts and Jobs Act increased the deduction limit for cash gifts to public charities to 60% of AGI through 2025, and the OBBBA made this increase permanent.

Potential strategy: Weigh the potential tax benefits of donating cash against the benefits of donating appreciated property. (See “Cash or appreciated assets: Which should you donate?” below.)

Timing is everything

The new tax law creates both opportunities and challenges for charitable donors. To support the causes you care about — while reducing your tax bill — ask your CPA for help developing a charitable giving strategy that aligns with the new rules and times your gifts for maximum impact.

Sidebar:   Cash or appreciated assets: Which should you donate?

Is it better to donate appreciated long-term capital assets or to sell those assets and donate the cash? The answer depends on several factors, including your adjusted gross income (AGI) and the size of the gift.

All things being equal, there’s an advantage to donating appreciated capital assets. That’s because, in addition to deducting the fair market value of the assets, you also avoid the capital gains taxes you would have owed had you sold the assets and donated the proceeds. But all things aren’t necessarily equal: You’ll also need to consider the lower deduction limit for capital assets (which is 30% of AGI) versus cash (which is 60% of AGI).

If the amount of your gift is less than 30% of your AGI, the deduction limit isn’t a factor and you’re better off donating assets. But if it’s more than 30% of your AGI, you’ll need to weigh the potential tax benefits of the two strategies. If you donate assets, you’ll avoid capital gains tax, but a portion of your deduction will have to be carried forward to future tax years. On the other hand, if you sell the assets and donate the proceeds, you’ll owe capital gains tax but will enjoy a larger charitable deduction in the first year.



Determining the right strategy is a matter of crunching the numbers and estimating the relative tax benefits in the coming years.