The “One Big Beautiful Bill”—signed into law on July 4, 2025—brings several significant updates that may affect charitable giving beginning January 1, 2026. While many familiar tax rules remain unchanged, new provisions introduce both opportunities and limitations for donors. Understanding these changes can help you make the most of your charitable giving and plan effectively for the future.

What’s Staying the Same

• Tax brackets: The existing 10%, 12%, 22%, 24%, 35%, and 37% income tax brackets are now permanent.
• Standard deduction: The standard deduction remains $15,750 for individuals and $31,500 for married couples in 2025, and will adjust annually for inflation.
• Deduction limits for charitable gifts: The 60%-of-AGI limitation for cash gifts to public charities and existing limits for gifts of long-term capital gain property remain unchanged. (This provision is now permanent with the OBBB.)
• Estate tax exemption: The federal estate and gift tax exemption may increase to $15 million per individual, indexed annually for inflation, and is now permanent.

What’s New Beginning in 2026

• New deduction for non-itemizers:
  Taxpayers who do not itemize deductions may now deduct up to $1,000 (individuals) or $2,000 (married couples) for charitable gifts. However, gifts to donor advised funds and private foundations are excluded from this deduction.
• New “floor” for itemizers:
  Itemizing taxpayers must contribute at least 0.5% of their adjusted gross income (AGI) to receive a charitable deduction. For example, a donor with $200,000 in AGI must give more than $1,000 to receive any deduction benefit. Contributions that don’t exceed this floor generally cannot be carried forward to future tax years.
• Cap on deductions for top earners:
  For taxpayers in the highest bracket, the value of charitable deductions will be capped at 35 cents per dollar. This means a $10,000 charitable contribution will yield $3,500 in federal income tax savings instead of $3,700 under prior law.
• Corporate giving floor:
  Corporations will now only be able to deduct charitable gifts that exceed 1% of taxable income, while keeping the overall 10% ceiling on total charitable deductions.

Planning Considerations for Donors

These changes create both opportunities and challenges for donors, especially those who give at higher levels or near the new deduction thresholds. Consider the following strategies as you plan your charitable giving:

• Maximize your 2025 giving:
  Donors who can give before year-end may benefit from the current, more favorable deduction rules before the new floors and caps take effect.
• Use donor advised funds strategically:
  Contributions to donor advised funds (DAFs) at the Community Foundation of Northeast Iowa allow donors to take an immediate tax deduction while granting funds to charities over time. While DAF gifts don’t qualify for the new non-itemizer deduction, they remain one of the most flexible and effective charitable giving tools for long-term impact.
• Coordinate with your financial advisor:
  The combination of new deduction floors, benefit caps, and corporate giving rules makes individualized planning more important than ever. We strongly recommend consulting your tax or financial advisor to evaluate how these changes may affect your giving strategy.

Supporting Your Charitable Giving

The Community Foundation of Northeast Iowa is here to help you continue making a difference in the causes and communities you care about. Whether you want to explore a donor advised fund, support a local nonprofit, or learn how the new tax law may influence your charitable goals, our team is ready to assist.

Contact our Charitable Impact Team. Click here to find our team members or contact us at give@cfneia.org or 319-287-9106 to start the conversation.

As always, please consult with your tax or legal advisor for guidance specific to your financial situation.