What the “Big Beautiful Bill” means for charitable giving strategies

The One Big Beautiful Bill Act (OBBBA) is reshaping the charitable giving landscape. And that presents an opportunity for financial advisors to help clients navigate the new law in a way that strengthens their finances and supports the causes they care about.

While philanthropy is ultimately about giving back, it’s also important to draft a plan that optimizes your clients’ tax benefits and financial plans. Tweaks to the tax code give you a reason to rethink and restrategize your clients’ giving plans for more tax-efficient philanthropy in 2025 and beyond.  

Some planning moves related to charitable donations need to happen before year-end, while other strategic adjustments can be implemented starting next year. Here’s a road map to help your charitably inclined clients revamp their giving strategies.  

Tax changes that impact charitable giving 

A key outcome of the OBBBA is the permanent extension of popular provisions such as lower tax rates and a higher standard deduction from the Tax Cuts and Jobs Act of 2017 (TCJA). The new bill also introduces tax-related provisions—including expanded deductions and a new threshold for itemizing charitable deductions—that will impact the tax efficiency of giving. A large increase in the deduction limit for state and local taxes (SALT) and a new, temporary $6,000 bonus deduction for seniors 65 and older could also play a role in planning strategies.   

New charitable giving rules 

Beginning in 2026, taxpayers who itemize can only claim a deduction for charity if the value of the gift(s) exceeds 0.5% of their adjusted gross income (AGI).  

For example, a couple with an AGI of $200,000 and charitable donations of $20,000 would only be able to deduct $19,000 if they itemize. The first $1,000 is not deductible due to the new 0.5% threshold. This is similar to the IRS rule for itemizing medical expenses (that is, only qualified expenses over 7.5% of AGI can be itemized and deducted).

Taxpayers who take the standard deduction, however, will now be able to claim a deduction. Starting next year, clients who don’t itemize can deduct up to $1,000 in cash charitable deductions ($2,000 for married couples filing jointly). Since there are no income phaseouts on this provision, this tax break is available in full to all non-itemizers. This provision, however, does not apply to donor-advised funds (DAFs). 

Strategies to benefit from short-term gifting windows in 2025 

A few of the new provisions, such as the 0.5% floor on charitable deductions, take effect in 2026—creating an incentive to accelerate charitable giving in 2025. By front-loading charitable gifts, clients can maximize their deductions and tax savings. While these extra tax savings may not be dramatic, any additional savings means more money in your clients' pockets and highlights the added value you provide. 

Actionable strategies include: 

Maximize tax savings with the help of the SALT cap increase: The ability for taxpayers who reside in high-tax states to deduct up to $40,000 in state and local taxes has a twofold benefit for those who give to charity: 

• The large deduction boosts their chances of being able to itemize on their return.
• Combining SALT deductions with a charitable giving plan and other itemized deductions can net even larger tax savings. 

Bunch gifts to take advantage of the 2025 planning window: Combining multiple years of charitable gifts into a single tax year—or “bunching”—on top of other deductions like SALT can potentially boost the amount of itemized deductions.  

Other benefits of bunching charitable donations: 

• Bunching can enable more of your clients to itemize and save more on taxes. This strategy works best when your clients are close to the standard deduction limits. The reason? It enables them to hurdle the IRS threshold for itemizing and avoid missing out on tax savings by having deductions that fall short of the standard deduction.
• Starting in 2026, bunching gifts can help your clients who itemize to surmount the new 0.5% AGI floor, enabling them to deduct a portion of their charitable gifts. 

Consider donor-advised funds: Giving through a DAF can make a bunching strategy even more powerful. Clients can contribute a large lump sum to a DAF in 2025 and receive an immediate tax deduction. The giver also gains flexibility using a DAF, as the invested funds can grow tax-deferred and be dispersed to charities over time.  

Implementing a bunching strategy using DAFs may also be prudent in future years—especially when donors experience financial windfalls, such as the sale of a business or a large spike in income. 

Contribute appreciated investments: Donating securities held for more than a year (directly or to a DAF) is another tax-efficient way to fund charitable giving that works well with bunching. It allows your clients to bypass long-term capital gains taxes and get an immediate tax break on the full market value of the assets donated. This strategy can make sense for a client with a large concentrated position in a stock that has posted large gains, as it also reduces stock-specific risk in the portfolio, compared to donating cash. 

Revisit QCD giving strategy: Reconsider whether clients age 70½ and older should continue utilizing a qualified charitable distribution (QCD) strategy, which is most beneficial for those who can’t itemize. Instead, consider switching to a “gifting from net RMDs” strategy, as the charitable contributions can be added to itemized deductions. This strategy could be particularly helpful for retirees who prior to the SALT increase didn’t have enough deductions to itemize but now are closer to the deduction threshold. The added benefit of donating appreciated securities could also help tip the scales toward itemizing instead of QCDs. 

Charitable gifting strategies for non-itemizers

In 2025, only taxpayers who itemize can deduct charitable gifts. Starting in 2026, single non-itemizers can deduct up to $1,000 in charitable cash contributions ($2,000 for married couples). So, non-itemizers may benefit by waiting until 2026 to make cash gifts to charity.

The OBBBA presents an opportunity for financial advisors to review and adjust clients’ giving strategies for greater tax efficiency and charitable impact. By proactively demonstrating your commitment to maximizing value and savings, assuming the role of charitable giving advisor can build trust and drive better outcomes for your clients—and your practice.