Taxpayers are reassessing how best to structure charitable donations under the One Big Beautiful Bill Act (OBBBA). Enacted earlier this year, the legislation introduces several changes that affect both taxpayers who itemize deductions and those who claim the standard deduction, though many of the most significant provisions won’t take effect until tax year 2026. For now, here is a closer look at the OBBBA’s impact on charitable giving for both itemizers and non-itemizers.

Why it matters

The changes introduced by the OBBBA make planning charitable giving more important than ever. Itemizers may see reduced tax benefits for smaller or incremental gifts, while non-itemizers now have an opportunity to receive a tax deduction for cash contributions. By carefully timing donations and selecting the right assets, taxpayers can maximize their impact on the causes they care about while optimizing tax outcomes under the new rules.

What are the general rules for charitable giving?

Charitable contributions are generally deductible only if made to IRS-qualified organizations, such as public charities, religious institutions, and certain nonprofits. Gifts may be made in cash or non-cash forms, including appreciated securities or other assets, and must be properly documented.

The deductibility of charitable gifts depends on whether a taxpayer itemizes deductions, the type of charity, the form of the gift, and applicable AGI limits. Unused deductions may generally be carried forward for up to five years.

What are the benefits of charitable giving for tax purposes?

Charitable giving can reduce taxable income while supporting causes that matter to the donor. Itemizers may lower their tax liability through charitable deductions, and gifts of appreciated assets can provide added tax benefits by avoiding capital gains taxes.

Beginning in 2026, non-itemizers can also receive a limited tax benefit for cash charitable contributions. With proper planning (i.e. timing gifts or selecting tax-efficient assets), charitable giving can play an important role in an overall tax and financial strategy.

What did the OBBBA change?

For itemizers, the value of charitable deductions is effectively capped at 35%, even for taxpayers in the top 37% bracket, slightly reducing the tax benefit of large gifts. Starting in 2026, charitable deductions are also subject to a new 0.5% of AGI floor, meaning taxpayers will only receive a deduction to the extent their total giving for the year exceeds 0.5% of their AGI. Strategies like bunching gifts or donating appreciated assets may help overcome these limits.

For non-itemizers, a new universal charitable deduction allows taxpayers to deduct up to $1,000 (single) or $2,000 (married filing jointly) for cash gifts to qualified charities, even when taking the standard deduction (excluding DAF contributions).

Additional Provisions

The OBBBA also introduces a nonrefundable tax credit of up to $1,700 for donations to scholarship-granting organizations supporting K–12 education, effective beginning in 2027. In addition, corporations will face a new 1 percent floor on charitable contribution deductions.

The Bigger Picture

Overall, the OBBBA is expected to reduce the tax incentive for charitable giving among higher-income itemizers while expanding incentives for taxpayers who previously received no benefit for donating. While the net revenue impact of these changes is relatively small, the timing of the new limits is likely to influence near-term giving behavior, particularly as taxpayers adjust their strategies ahead of 2026.