Navigating Charitable Giving in the Wake of the One Big Beautiful Bill Act
- JIM PALUMBO
- Dec 1, 2025
- 3 min read
As we wrap up another year and gear up for the twists and turns of 2026, I'm always on the lookout for ways to help you make the most of your hard-earned wealth—especially when it comes to giving back. Tomorrow, I'll be tuning into a webinar from DAFgiving360 featuring Julia Reed and tax whiz Jorge Castro, diving deep into how the recently passed One Big Beautiful Bill Act (OBBBA) shakes up charitable planning. Since these sessions never come with handouts, I thought I'd jot down a preview based on the key topics they'll cover. Think of this as my cheat sheet to the obvious highlights: the fresh tax changes from OBBBA and the smart techniques we can use to keep your philanthropy tax-efficient and impactful.
Let's start with the elephant in the room—the OBBBA itself. This sweeping tax legislation, signed into law earlier this year, brings a mix of opportunities and hurdles for donors. On the plus side, it bumps up the state and local tax (SALT) deduction cap from $10,000 to $40,000 for 2025, with a 1% annual hike through 2029. *dafgiving360.org. If you're in a high-tax state like Colorado, this could make itemizing deductions more appealing again, potentially amplifying the tax break from your charitable gifts.
But it's not all smooth sailing. Starting in 2026, the bill caps the tax benefit on itemized charitable deductions at a 35% rate, even if you're in the top 37% bracket. *fidelitycharitable.org. That means high earners might see a bit less bang for their buck on big donations. There's also a new "floor" for charitable deductions: individuals can only deduct gifts exceeding 0.5% of their adjusted gross income (AGI), and corporations face a 1% threshold. *gtlaw.com It's like the IRS is saying, "Show us you're serious about giving before we give you the full credit." For non-itemizers, though, there's a silver lining—a new above-the-line deduction for cash contributions up to $1,000 for singles or $2,000 for joint filers. rbcwealthmanagement.com. This could encourage more everyday philanthropy without the hassle of itemizing.
Now, onto the techniques that stand out as evergreen winners, especially in this evolving landscape. Donor-advised funds (DAFs) are front and center here—they're like a charitable checking account where you can contribute assets, get an immediate tax deduction, and then recommend grants over time (I can open a DAF for you easily). With OBBBA's changes, bunching donations into a DAF every few years could help you hit that itemizing threshold and maximize benefits before the new floors kick in. Plus, DAFs let you donate appreciated stocks or complex assets without triggering capital gains taxes, turning market wins into charitable gold.
Another go-to move: Qualified Charitable Distributions (QCDs) from your IRA if you're over 70½. These direct transfers count toward your required minimum distributions but don't bump up your taxable income—perfect for sidestepping some of OBBBA's caps on deduction benefits. And don't overlook legacy planning; incorporating charitable trusts or bequests into your estate strategy can reduce estate taxes while ensuring your values live on. I did a few of these for clients in the last months and they went smoothly and successfully.
Why bother weaving all this into your wealth plan? Simple—philanthropy isn't just feel-good; it's a powerhouse for tax optimization. As markets fluctuate (remember that tariff storm we weathered back in September?), aligning giving with your investments keeps things balanced. The webinar will likely touch on the regulatory outlook for DAFs too, including any potential tweaks that could affect privacy or payout rules.
Bottom line: OBBBA mixes things up, but with the right plays, we can turn these changes into advantages for you and the causes you care about, especially if you are already giving to charities but with after tax dollars. If you're mulling over year-end gifts or plotting for 2026, let's chat—I'm here to tailor this to your situation. Stay tuned; I'll update if the webinar drops any surprises.
Warm regards,
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