When the “One Big Beautiful Bill Act” (OBBBA) was signed into law in 2025, most headlines focused on tax brackets and government spending. But for generous families, business owners, and ministries, the more important question is: How does this affect my charitable giving?
The short answer: new rules limiting charitable deductions begin in 2026—so accelerating as much giving as possible into 2025 is the smartest move.
Why Accelerate Giving Into 2025?
Beginning in 2026, two key changes will limit the tax efficiency of charitable gifts:
- Deduction floor: Charitable gifts must exceed 0.5% of adjusted gross income (AGI) before they become deductible. For example, if your AGI is $500,000, the first $2,500 of gifts will no longer count toward deductions.
- Deduction ceiling: High-bracket taxpayers will only be able to deduct gifts at a maximum of 35% instead of 37%, slightly reducing the tax savings from donations.
Estate and Gift Exclusion
The OBBBA also permanently increased the federal estate tax exclusion amount to $15 million for individuals and $30 million for married couples, starting in 2026. This means families can transfer up to those amounts to heirs without incurring estate taxes.
For most families, this change removes uncertainty — but for larger estates, it also highlights the value of giving intentionally. Many choose to direct a portion of their estate to ministry, ensuring resources are used for lasting impact rather than taxes.
Other Notable Changes (Effective 2026)
- Standard deduction: Rising to $15,750 for individuals and $31,500 for couples. Since fewer households will itemize, “bunching” two or three years of gifts into one year may help you itemize and increase efficiency.
- Above-the-line deduction: Non-itemizers will be able to deduct up to $1,000 ($2,000 for couples) for cash gifts to churches and charities in addition to the standard deduction. Important note: this does not apply to donor-advised funds.
What This Means for You
If you are considering whether to give this year or next, 2025 is the most advantageous year. Accelerating gifts now allows you to maximize both charitable impact and tax efficiency before the new rules take effect.
At WaterStone, we help families and business owners turn complex tax law into simple, actionable strategies for giving. Whether you’re planning a major gift, updating the charitable portion of your estate plan, or simply want to give more wisely, we’re here to help.
Let’s make your 2025 giving count.
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