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Charitable Giving Changes: 2025 vs 2026 Impact of the One Big Beautiful Bill Act

Today, on Giving Tuesday, a global day dedicated to generosity and charitable impact, it’s the perfect time to look ahead at how upcoming changes will shape philanthropy. The One Big Beautiful Bill Act, signed into law in 2025, introduces major charitable-giving provisions effective January 1, 2026. These updates will transform how donors deduct charitable gifts and open new planning opportunities in 2025.

Overview

The One Big Beautiful Bill Act was signed into law in 2025, with major charitable-giving provisions taking effect on January 1, 2026. These changes affect how donors deduct charitable gifts and create new planning opportunities in 2025.

Key Differences Between 2025 and 2026

1. New Universal Charitable Deduction (Begins 2026)

Starting in 2026, taxpayers who take the standard deduction can claim an above the line charitable deduction

• Limits: up to 1,000 for single filers or 2,000 for joint filers. Applies only to cash gifts to qualifying public charities. 
• Not eligible: donor advised funds and private foundations.
• 2025: No charitable deduction available for non itemizers.

2. New AGI Floor on Itemized Charitable Deductions

Beginning in 2026, donors who itemize may only deduct charitable gifts that exceed 0.5 percent of AGI. Gifts below this floor are not deductible.

• 2025: Full deductibility of eligible charitable contributions (subject to existing AGI limits).

3. Cap on Deduction Value for High Earners

Starting in 2026, the effective tax benefit of charitable contributions is capped at a 35 percent rate for top bracket taxpayers.

• 2025: Charitable deductions reduce income at the donor’s marginal tax rate (up to 37 percent).

4. Continued AGI Percentage Limits

The Act retains the 60 percent AGI limit for cash gifts to public charities. Non cash and other limits remain unchanged.

Planning Considerations

Opportunities in 2025

Accelerate giving while deductions are more favorable. Use donor advised funds to secure 2025

deductions while distributing grants over time. Bunch contributions if needed to exceed itemization thresholds.

Considerations for 2026

Non itemizers may receive a modest tax benefit. Itemizers making smaller gifts may lose some deductibility due to the new AGI floor. High earners may see reduced tax benefit due to the 35 percent cap.

Using Your IRA-Qualified Charitable Distributions (QCDs)

Keep in mind, one strategy to avoid the new limitations is to give directly from your individual retirement account (IRA.) Individuals age 70 1/2 or older may transfer up to $108,000 annually from IRAs directly to charity. Married couples may annually transfer up to $216,000. These limits are adjusted annually for inflation. The amounts transferred to charity count towards satisfying any required minimum distributions (RMDs) and are not included in the donor’s gross income. Because the distribution is not included in the gross income of the donor the way an RMD is, there is no increase to a donor’s Medicare premiums, Social Security tax obligations or the donor’s effective tax rate (but note there is no charitable deduction, either).

The distribution must be made by the IRA trustee directly to a “qualified public charity” and does not include a transfer to a donor-advised fund, supporting organization or private foundation (other than operating foundations or pass-through/conduit foundations).

Summary

2025 offers more favorable deduction rules for most donors, especially larger givers. The 2026 rules introduce new benefits for non itemizers, but create limitations for high income donors and smaller gifts. Strategic planning in 2025 may provide meaningful tax advantages.

We’re here to guide you through these changes and help you make the most of your charitable giving. Please don’t hesitate to reach out. We’re ready to assist whenever you need us.

This material is provided for educational and informational purposes only. It is not intended as investment advice or a recommendation to engage in any investment strategy. Acumen Wealth Advisors does not provide tax or legal advice. The information contained herein is not intended to be used, and cannot be used, for the purpose of avoiding tax penalties. Clients should consult with a qualified tax or legal professional regarding their specific circumstances. Information has been obtained from sources believed to be reliable, but its accuracy and completeness cannot be guaranteed. Certain statements may contain forward looking expectations that are subject to change and may differ materially from actual results.This document does not constitute an offer to sell or the solicitation of an offer to purchase any security, investment product, or strategy.