Tax legislation: At the moment, uncertainty prevails

Not knowing is hard! 

At the Community Foundation for Greater Atlanta, we understand that uncertainty about potential changes to tax laws makes estate planning especially difficult for you and other attorneys, CPAs, and financial advisors. You’re faced with advising your clients and structuring plans without knowing which rules will ultimately apply. It’s uncomfortable to face the risk that carefully-crafted strategies could become obsolete or even detrimental if laws shift unexpectedly. Plus, your clients often hope to “wait and see,” which could result in missed opportunities or rushed decisions if changes occur suddenly. 

This is exactly what advisors are facing right now in light of the so-called “Big Beautiful Bill” (H.R. 1) that passed the House of Representatives by a 215-214 vote on May 22, 2025, and now moves to the Senate, where significant changes are expected before final passage. The net-net here is that no one knows where this will land.

Our team is carefully watching provisions of the bill that could affect the charitable planning techniques you recommend to clients. For example: 

Estate tax exemption. The bill makes permanent the 2017 tax cuts under the Tax Cuts and Jobs Act (TCJA). This means that the much-anticipated sunset of the increased estate tax exemption at the end of 2025 might not happen after all. If the estate tax exemption remains high, a smaller segment of your clients will be motivated to use charitable giving as a way to avoid estate tax. Still, though, because people rarely give to charity solely for tax avoidance purposes, your clients remain very interested in discussing ways to incorporate philanthropy into their estate and financial plans. 

Standard deduction. The proposals in the bill would make permanent the higher standard deduction levels from the TCJA, and even add an additional temporary increase through 2028. The upshot here is that few taxpayers itemize their deductions, reducing the number of people eligible to claim a charitable deduction. The still-high standard deduction likely could signal continuation of the decline in charitable giving that followed the 2017 tax cuts. On the flip side, the bill introduces a modest “above-the-line” charitable deduction for nonitemizers—$150 for individuals and $300 for joint filers. 

Taxes on private foundations. The bill sharply increases excise taxes on the investment income of large private foundations, raising rates from the current 1.39% to as much as 10% for the largest entities, although private foundations with less than $50 million in assets would see no change. What this means for your charitable clients is that private foundations may become less attractive. Many nonprofit leaders are concerned that this could impact charitable giving; it might also mean that donor-advised funds could become even more attractive. Certainly the Foundation remains committed to helping your clients establish donor-advised funds and other vehicles to actively support their favorite charities as well as ensure that critical local needs are addressed.

The Senate is expected to begin its markup in June, with the process likely extending into July or August as both chambers reconcile differences before sending the bill to President Trump for signature.

We will keep you informed! Our goal is to help you serve your clients as they support their favorite causes and fund important local needs. The Foundation is here for you, your clients, and our community through the ups and downs of the market, the uncertainty of pending tax law changes, and the ever-evolving needs of our community that philanthropy is uniquely suited to address. Please reach out anytime.