One Big Beautiful Bill Act: Three Insights for Philanthropy

Source: The Community Giving Foundation

The One Big Beautiful Bill Act was signed into law on July 4, 2025, after the House of
Representatives approved the Senate’s changes to H.R.1, which passed the House by a narrow
margin in May.

The OBBBA, with nearly 900 pages or provisions, reshapes policy across major sectors of the
U.S. economy. Included are several provisions that impact philanthropy. Three major takeaways
are of particular importance as Community Giving Foundation helps donors, fundholders, and
nonprofits—as well as attorneys, CPAs, and financial advisors—navigate charitable planning
opportunites over the months and years ahead.

(Notably, the OBBBA omits several provisions that appeared in previous versions of the
legislation, such as a proposed increase to the net investment income tax on private
foundations.)

INSIGHT #1: Standard Deduction Goes Higher

What’s in the OBBBA? The new law makes permanent the standard deduction increases
under the Tax Cuts and Jobs Act of 2017 (TCJA), increasing the standard deduction for 2025 to
$15,750 for single filers and $31,500 to taxpayers who are married and filing jointly. The new
law also expands the “bonus” deduction for taxpayers 65 and older through 2028. What’s more,
under the new law, individuals who itemize may take charitable deductions only to the extent the
charitable deductions exceed 0.5% of adjusted gross income. Furthermore, taxpayers in the top
bracket can only claim a 35% deduction for charitable gifts instead of the full 37% that would
otherwise apply to their income tax rate. Note also that the final bill permanently extended the
60% of adjusted gross income contribution limitation for cash gifts made to certain qualifying
charities.

What does this mean for charitable giving? With even fewer taxpayers eligible to itemize,
and deductions capped for high-income earners, we’re likely to see a continuation of the chilling
effect on charitable giving that occurred in the wake of the TCJA.

What can you do? If you regularly support charities, it’s important to continue to do so whether
or not you’re benefiting from a tax deduction. Our community needs you, now more than ever. If
you’re a nonprofit, or if you’re an attorney, CPA, or financial advisor who works with charitable
clients, remember that people do not give to charity solely to secure a tax deduction. Keep in
mind that many other factors motivate charitable giving, and philanthropy is an important priority
for many families. (This article in the Stanford Social Innovation Review has stood the test of
time.)

INSIGHT #2: Deduction for Non-Itemizers

What’s in the OBBBA? The new law includes a provision, effective after 2025, allowing nonitemizers to take a charitable deduction of $1,000 for single filers and $2,000 for taxpayers who are married and filing jointly. As has been the case in the past, gifts to donor advised funds are not eligible. Unlike a previous (but smaller) similar provision, though, this law is not set to
sunset.

What does this mean for charitable giving? After the TCJA went into effect, households that itemize deductions dropped to under 10%. Parallel to this trend, the number of U.S. adults who give to charity in any given year has dropped over the last 20 years from nearly two-thirds to less than half, according to some studies. Against this backdrop, the OBBBA’s deduction for
non-itemizers has the potential to re-motivate charitable giving among a significant number of households.

What can you do? For everyone, now is the time to take a serious look at your charitable giving plans to support the causes you care about over the years ahead, especially if you are early in your career and not yet itemizing deductions. If you’ve already established a fund or you’re working with Community Giving Foundation in another way, please reach out to learn
how we can help you make the most of the new tax laws, and even get your children and grandchildren involved. If you’re a nonprofit, now is the time to attract and engage brand new donors. And if you’re an attorney, CPA, or financial advisor, make sure you talk about charitable giving with your clients who don’t itemize—a $1,000 or $2,000 deduction could be just the motivation they need to begin a journey of philanthropy.

INSIGHT #3: No Sunsetting Estate Tax Exemption

What’s in the OBBBA? For affluent taxpayers updating financial and estate plans, and for the attorneys, CPAs, and wealth managers advising them, the last couple of years have been a roller coaster because of the looming possibility that the TCJA’s increase to the estate tax exemption would sunset at the end of 2025. Finally, there is clarity: Under the OBBBA, the sunset will not happen. The new law makes permanent the increase in the unified credit and generation-skipping transfer tax exemption threshold. The 2025 exemption is $13.99 million for single filers and $27.98 million married filing jointly. In 2026, these numbers increase to $15 million and $30 million respectively.

What does this mean for charitable giving? Purely estate tax-based incentives to give to charity continue to apply only to the ultra-wealthy, likely resulting in a continuation of the taxpayer behavior triggered by the TCJA. In other words, most people will give to charity during their lifetimes and in their estates for reasons other than a tax deduction.

What can you do? There is no guarantee that the estate tax exemption will stay high forever. As families work with their tax and estate planning advisors, many are viewing the next two years as an important window to plan ahead. The upshot of the new law is that high net-worth taxpayers now have more time to thoughtfully consider estate planning strategies, including charitable giving. For nonprofits, this means continuing to focus on long-term planned giving strategies is wise.

"The Community Giving Foundation is here for you, your clients, and our community. Please reach out to discuss charitable giving strategies tailored to meet your goals. Alyssa Meyers-Sanonu, Foundation Director of Philanthropy
570-854-3504 (cell) | ameyers-sanonu@csgiving.org

The team at the Community Giving Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. Learn more at csgiving.org/professional-advisors. This newsletter is provided for informational
purposes only. It is not intended as legal, accounting, or financial planning advice."

The Community Giving Foundation is a 501(c)(3) organization that develops, manages, and distributes funds for charitable purposes in communities across the Central Susquehanna region of Pennsylvania.
725 West Front Street • Berwick, PA 18603 • 570-752-3930 • csgiving.org

###

The Columbia Montour Chamber of Commerce is a private non-profit organization that aims to support the growth and development of local businesses and our regional economy. We strive to create content that not only educates but also fosters a sense of connection and collaboration among our readers. Join us as we explore topics such as economic development, networking opportunities, upcoming events, and success stories from our vibrant community. Our resources provide insights, advice, and news that are relevant to business owners, entrepreneurs, and community members alike.