What the new tax law means for charitable giving

The recently passed tax bill known as the “One Big Beautiful Bill” that was signed into law on July 4, 2025, includes a handful of important changes to charitable giving.

Here are seven important elements of the new law, which takes effect Jan. 1, 2026:

What’s staying the same:

• Tax brackets: The new law permanently extends the 10%, 12%, 22%, 24%, 35% and 37% income tax rates.
• Standard deduction: The standard deduction will remain $15,750 for individuals and $31,500 for married couples in 2025. It will be indexed for inflation thereafter.
• Deduction limits for cash gifts: The act permanently extends the 60%-of-AGI (adjusted gross income) limitation for cash gifts to public charities, and keeps in place the deduction limits for gifts of long-term capital gain property, as well.
• Estate tax exemption: The federal estate and gift tax exemption will increase to $15 million per individual (adjusted annually for inflation). This provision is now permanent.

What’s new in 2026:

• New tax deduction for non-itemizers: You can deduct up to $1,000 (individuals) or $2,000 (married couples) for charitable gifts, even if you don’t itemize. However, gifts to donor advised funds are excluded from this new tax break.
• A new floor on charitable deductions for itemizers: The new law requires taxpayers to give at least 0.5% of their AGI to receive a tax benefit for their charitable giving. This means someone making $200,000 annually would have a $1,000 floor, meaning a $900 donation would result in no deduction but a $1,500 donation would result in a $500 deduction.
• New cap on deductions: The new law creates a cap on the value of chartiable deductions that will hit taxpayers in the highest bracket. Under current law, top earners get a 37-cent tax benefit for every $1 deducted. Starting in 2026, that benefit will be capped at 35 cents per dollar, meaning a $10,000 charitable contribution would yield $3,500 in federal income tax savings instead of $3,700.

For those in the top tax bracket, these changes are likely to reduce the tax value of charitable giving starting in 2026. Donors who can take advantage of the current law should consider increasing their giving in 2025. For example, donors may wish to front-load several years of giving into a new or existing donor advised fund at the Community Foundation for Greater Atlanta. Please reach out to Kimberly Spear at kspear@cfgreateratlanta.org if you would like to learn more.

We encourage you to consult with your tax advisor to understand how these changes may affect your giving in 2025 and beyond.