The One Big Beautiful Bill Act (OBBBA), effective July 4, 2025, significantly impacts charitable deduction strategies. The OBBBA reshapes both how much a client can deduct for charitable contributions and which clients can benefit from these deductions in the first place.
Key Client Discussion Points:
Bunching Strategy Benefits
With standard deductions rising to $15,750 (single) and $31,500 (married) in 2025, many clients benefit from "bunching" contributions. Example: A client typically giving $12,000 annually could contribute $36,000 to a donor advised fund in 2025, exceed the standard deduction threshold, then distribute over three years while taking standard deductions in subsequent years.
2026 Planning Considerations
Starting in 2026, only charitable donations exceeding 0.5% of AGI will be deductible. High-income taxpayers will also see their maximum charitable deduction benefit calculated at 35% rather than 37%. These changes may prompt accelerated giving strategies in 2025.
Non-Itemizer Deduction
Beginning 2026, non-itemizers can claim direct charitable deductions up to $1,000 (single) or $2,000 (married), but only for cash gifts to qualified charities. Donor advised funds and appreciated stock donations don't qualify.
The Community Foundation's donor advised funds provide flexible solutions for implementing these strategies while ensuring your clients' philanthropy addresses vital community needs.