By Jordan Smith, March 10, 2026
Asena Advisors
As we approach 2026, significant tax changes on charitable giving will impact donors across all financial backgrounds. The One Big Beautiful Bill Act (OBBA) marks a pivotal reform, influencing how both itemizers and non-itemizers can claim deductions. While changes may seem daunting, they also introduce unique opportunities for optimized philanthropic strategies. By planning thoughtfully in 2025, donors can maximize their generosity without sacrificing tax benefits.
Understanding the 2026 Changes
Beginning January 1, 2026, the implementation of OBBA will introduce several key modifications affecting charitable deductions:
1. Introduction of a New Non-Itemizer Deduction
One of the most notable updates is that, starting in 2026, individuals who take the standard deduction will have the opportunity to claim a new above-the-line charitable deduction. This deduction will allow individuals to deduct up to $1,000 or $2,000 for joint filers. This change aims to incentivize consistent annual contributions, even for those who find itemizing deductions less beneficial.
However, it’s important to note that this deduction only applies to cash donations made directly to public charities. Contributions made to Donor Advised Funds (DAFs) or private foundations will not qualify for this new deduction.
2. Establishment of a New Floor for Itemizers
Under the new regulations, itemizers will only be able to deduct charitable contributions that surpass 0.5% of their Adjusted Gross Income (AGI). For instance, a donor with an AGI of $300,000 must contribute more than $1,500 before qualifying for a charitable deduction. This presents an opportunity for donors to ‘bunch’ contributions from multiple years into 2025, which allows them to exceed the new floor and maximize their deductions.
3. Implementation of a New Cap for Top-Bracket Donors
In a significant shift, starting in 2026, charitable deductions will be capped at a 35% rate, even for high-income earners who may previously have benefited from higher deduction rates. For example, a donor in the 37% tax bracket making a $100,000 gift will only receive a $35,000 deduction rather than $37,000. As a result, donors in higher tax brackets should seriously consider accelerating major gifts into 2025 to capitalize on the current deduction levels.
The Importance of Strategic Planning in 2025
Financial advisors and philanthropic experts consistently emphasize one key strategy: accelerate your charitable giving in 2025. Major financial institutions has identified this year as a critical phase for various reasons:
- Lock in higher deduction values before the new limitations take effect.
- Avoid the new floor on itemized deductions.
- Retain the full value of significant charitable contributions.
- Utilize Donor Advised Funds to pre-fund future giving.
In addition to tailoring their financial objectives, donors need to acknowledge the challenges nonprofits are currently facing. Findings from our recent Nonprofit Survey reveal that organizations are grappling with reduced federal funding against the backdrop of escalating community needs. This convergence of timing, tax incentives, and evolving nonprofit dynamics makes 2025 a uniquely advantageous year for giving.
Recommended Strategies for Donors in 2025
To best leverage this pivotal time, the following three strategies are recommended for donors looking to enhance their charitable impact:
1. Utilize a Donor Advised Fund for Bunched Giving
One effective strategy is to consolidate multiple years’ worth of charitable contributions into a single tax year. A Donor Advised Fund is particularly suitable for this approach, offering several benefits:
- Maximize deductions for the year 2025.
- Bypass the newly established AGI floor for itemized gifts.
- Gift appreciated assets to avoid capital gains taxes.
- Simplify grant-making on your own timeframe.
By establishing a Donor Advised Fund through local foundations, donors can access comprehensive philanthropic advising, localized insights, and unique engagement opportunities.
2. Accelerate Major Gifts and Legacy Contributions
For high-net-worth donors, this is an opportune moment to consider accelerating significant gifts that align with broader estate or retirement plans. Potential options include:
- Direct contributions to qualifying nonprofit organizations.
- Funding a Donor Advised Fund for long-term giving.
- Creating a Designated or Field of Interest fund.
- Advancing legacy commitments and bequest arrangements.
3. Continue Making Qualified Charitable Distributions (QCDs)
Qualified Charitable Distributions, particularly for those aged 70½ and above, remain a beneficial tactic. In 2025, eligible donors can donate up to $108,000 directly from their IRAs to designated charitable funds. This effectively circumvents taxable income and may also satisfy required minimum distributions.
Partnering with the Community Foundation
At the Community Foundation, we are committed to collaborating with both donors and advisors to formulate impactful giving strategies that meet the changing landscape of philanthropy and community needs. Our team offers:
- Customized philanthropic planning tailored to individual goals.
- Expert guidance on gifts involving complex or appreciated assets.
- In-depth knowledge regarding regional nonprofits and their missions.
- Stewardship support to help maintain lasting legacies.
In summary, proactive planning in 2025 can transform upcoming tax law changes into powerful opportunities for philanthropy. Whether navigating your own charitable initiatives or advising clients, organizations like Asena Advisors can equip you with the resources necessary to promote a flourishing Southwest Washington.
For those seeking further insights, feel free to explore more about strategic giving through our resources Asena Advisors.
Disclaimer: The above information is intended for educational purposes only and should not be construed as legal or financial advice. Always consult with a qualified professional regarding tax-related issues and charitable contributions.