Since its enactment on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) has raised questions among attorneys, CPAs and financial advisors. Below is a summary of the key opportunities and challenges.

Potential Opportunities

🔹 Charitable Deduction for Non-Itemizers

  • Permanent deduction: $1,000 for individuals, $2,000 for joint filers.
  • Excludes donor advised fund contributions.

🔹 Child Tax Credit

  • Maximum credit: $2,200 (2025–2028), then reverts to $2,000.
  • Households with ITIN filers or insufficient taxable income are ineligible.

🔹 “Trump Accounts”

  • Government-seeded account: $1,000 per newborn.
  • Others may contribute up to $5,000 annually.

Potential Challenges

🔹 Corporate Charitable Contribution Floor

  • Companies must give ≥1% of taxable income to qualify for charitable deduction.

🔹 Standard Deduction

  • Permanently $15,000 (individual) / $30,000 (joint).
  • Fewer taxpayers can itemize, reducing charitable giving incentives.
  • Highlights importance of non-itemizer deduction.

Advisor Strategies

  1. Timing Acceleration Strategies
    1. Leverage current favorable tax provisions by accelerating charitable contributions
    2. Consider front-loading planned 2025+ donations to maximize deductions under existing rules before regulatory changes take effect
  2. Charitable Bunching Techniques
    1. Consolidate multiple years of intended charitable contributions into a single tax year to optimize itemized deduction benefits
    2. Particularly effective for clients who alternate between standard and itemized deductions
  3. Donor-Advised Funds (DAFs)
    1. Enable immediate tax deduction upon contribution while maintaining flexible distribution timing to chosen charities
    2. Provide investment growth potential for charitable assets between contribution and distribution
  4. Qualified Charitable Distributions (QCDs)
    1. Available to taxpayers age 70½ and older with annual limit of $108,000 in 2025
    2. Requires direct transfer from IRA to qualifying charity
    3. Excludes distribution from gross income, bypassing both the 0.5% AGI floor and 35% itemized deduction limitations
    4. Counts toward required minimum distribution obligations
  5. Appreciated Securities Donations
    1. Claim full fair market value deduction for long-term appreciated securities when itemizing
    2. Eliminate capital gains tax liability on appreciation
    3. Subject to AGI limitations: 30% for public charities, 20% for private foundations
    4. Often more tax-efficient than liquidating assets for cash donations

Contact our team for guidance on charitable giving strategies that align with current tax advantages.