What the One Big Beautiful Bill Act Means for Charitable Givers

Signed into law on July 4, 2025, the One Big Beautiful Bill Act introduces significant changes to how charitable tax deductions will work starting in 2026. If your family gives generously and relies on tax-efficient giving strategies—whether through itemizing, using a donor advised fund, or claiming the standard deduction—these updates could affect your plans. Here’s what you need to know.

Increased standard deduction

Section 70102

The standard deduction will increase retroactively for tax year 2025 and remain at this new level in future years (adjusted for inflation). In 2025, the standard deduction is:

• $15,750 for individuals
• $31,500 for joint filers

What changed?

Previously, the 2025 standard deduction was scheduled to be $15,000 for individuals and $30,000 for joint filers.

New floor on charitable deductions

Section 70425

Starting in 2026, taxpayers may only claim a charitable tax deduction for qualified donations in excess of 0.5% of their adjusted gross income (AGI).

Example: If your 2026 AGI is $100,000, you may only deduct the portion of your charitable donations that exceeds $500. If you donate $10,000 to charity, you may deduct $9,500.

What changed?

Previously, charitable contributions were tax deductible from the first dollar.

New universal charitable deduction

Section 70424

Beginning in 2026, taxpayers who do not itemize may claim a universal charitable tax deduction in addition to the typical standard deduction. The universal charitable tax deduction is:

• Up to $1,000 for individuals
• Up to $2,000 for joint filers

Important notes:

• This deduction does not apply to donor advised fund contributions.
• The 0.5% AGI floor described above also applies to this deduction.

What changed?

Previously, there was no permanent universal charitable tax deduction. A temporary $300 deduction was introduced under the CARES Act in 2020 and expired after 2021.

New limit on the value of tax deductions

Section 70111

Starting in 2026, the marginal value of itemized deductions will be capped at 35 cents for each additional $1 deducted, even for taxpayers in the 37% tax bracket threshold.

This is not a cap on the total amount you may deduct, but it limits the tax benefit per dollar deducted.

What changed?

Previously, a taxpayer in the 37% tax bracket would save 37 cents per dollar deducted. Starting in 2026, they will save only 35 cents.

Permanent charitable deduction limit

Section 70425

For cash gifts to public charities, individual donors may deduct up to 60% of their AGI. Excess amounts may be carried forward for up to five years.

Note: This includes gifts to donor advised funds. For noncash appreciated assets, different limits apply.

What changed?

The 60% limit was previously temporary and set to expire at the end of 2025. This provision makes it permanent.

New tax credit for scholarship donations

Section 70411

Starting in 2027, cash contributions to certain scholarship-granting organizations may qualify for a nonrefundable tax credit of up to $1,700, depending on your state’s program.

What changed?

This is a newly available tax credit.