New Federal Tax Law: What the One Big Beautiful Bill Act Means for Charitable Giving

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is nearly 1,000 pages of sweeping policy changes. Among its many provisions are several with direct implications for charitable giving, estate planning, and nonprofit operations. Here are three key takeaways for advisors and their clients. 

Insight #1: Standard deduction goes higher 

What’s in the OBBBA?

The new law makes permanent the standard deduction increases under the Tax Cuts and Jobs Act of 2017 (TCJA). New standard deduction (2025):

• $15,750 single
• $31,500 married filing jointly (MFJ)
• Expanded “bonus” deduction for taxpayers 65+ through 2028
• Charitable deductions for itemizers: Only the amount over 0.5% of adjusted gross income counts
• Top bracket charitable deduction limited to 35% (instead of the full 37% that would otherwise apply to their income tax rate)
• 60% AGI limit for cash gifts to qualifying charities extended

What does this mean for charitable giving? 

With even fewer taxpayers eligible to itemize, and deductions capped for high-income earners, we’re likely to see a continuation of the chilling effect on charitable giving that occurred in the wake of the TCJA. 

What can you do? 

If you’re an attorney, CPA, or financial advisor who works with charitable clients, remember that people do not give to charity solely to secure a tax deduction. Many other factors motivate charitable giving, and philanthropy is an important priority for many families. (This article in the Stanford Social Innovation Review has stood the test of time.) 

If you support charities yourself, your continued support is critical to our nonprofits and neighbors, whether or not you’re benefiting from a tax deduction. Our community needs you, now more than ever.

Insight #2: Deduction for non-itemizers 

What’s in the OBBA? 

The new law includes a provision, effective after 2025, allowing non-itemizers to take a charitable deduction of $1,000 for single filers and $2,000 for MFJ taxpayers. As has been the case in the past, gifts to donor-advised funds are not eligible. Unlike a previous (but smaller) similar provision, though, this law is not set to sunset.  

What does this mean for charitable giving? 

After the TCJA went into effect, households that itemize deductions dropped to under 10%. Parallel to this trend, the number of U.S. adults who give to charity in any given year has dropped over the last 20 years from nearly two-thirds to less than half, according to some studies. Against this backdrop, the OBBBA’s deduction for non-itemizers has the potential to re-motivate charitable giving among a significant number of households.  

What can you do? 

Discuss the non-itemizer deduction with clients early, especially those in early career stages or with moderate incomes. A $1000 or $2000 deduction could be just the motivation they need to begin a journey of philanthropy.  

For anyone with charitable inclinations, now is the time to take a serious look at your giving plans to support the causes you care about over the years ahead. The Community Foundation has funds well suited to welcome gifts of this nature: giving circle endowment funds, field of interest funds (e.g. education, aging, upward mobility), and Community Impact or unrestricted funds.

Insight #3: No sunsetting estate tax exemption 

What’s in the OBBBA? 

For affluent taxpayers updating financial and estate plans, and for the attorneys, CPAs, and wealth managers advising them, the last couple of years have been a roller coaster.  We’ve all been anxiously watching to see whether the TCJA’s increase to the estate tax exemption would sunset at the end of 2025. Finally, there is clarity: Under the OBBBA, the sunset will not happen. The new law makes permanent the increase in the unified credit and generation — skipping transfer tax exemption threshold. The 2025 exemption is $13.99 million for single filers and $27.98 million MFJ. In 2026, these numbers increase to $15 million and $30 million respectively. 

What does this mean for charitable giving? 

Purely estate tax-based incentives to give to charity continue to apply only to those with very large estates, likely resulting in a continuation of the patterns we’ve seen since the TCJA. In other words, most people will give to charity during their lifetimes and through their estates for reasons that go beyond tax deductions — driven instead by values, impact, and a desire to leave a meaningful legacy. 

What can you do? 

There is no guarantee that the estate tax exemption will stay high forever. As families work with their tax and estate planning advisors, many are viewing the next two years as an important window to plan ahead. The upshot of the new law is that high net-worth taxpayers now have more time to thoughtfully consider estate planning strategies, including charitable giving. For nonprofit organizations, this means continuing to focus on long-term planned giving strategies is wise.    

Don’t forget New York State tax implications… 

While the federal estate tax exemption remains high and permanent under the OBBBA, New York State does not conform to these federal changes.

As of 2025, New York’s estate tax exemption is $7.16 million — significantly lower than the federal threshold. New York also has a “cliff,” meaning that if a taxable estate exceeds the exemption by more than 5%, the entire estate is subject to tax, not just the amount over the limit. This makes state-level planning especially important for New York residents with estates between $7 and $15 million. Strategies like lifetime giving, charitable trusts, and gifting to reduce estate size may be particularly relevant. 

Final Thoughts

As the estate planning landscape continues to evolve — both federally and at the state level — the Community Foundation is here to help you navigate these changes. We can provide the philanthropic tools, resources, and expertise to support thoughtful, tax-wise charitable planning. Let us be your partner in turning values into impact — now and for generations to come. Connect with Kayleigh Rae Stampfler, director of legacy giving: kstampfler@racf.org.

(The final OBBBA omits several provisions that appeared in previous versions of the legislation, such as a proposed increase to the net investment income tax on private foundations.)