Helping Donors Navigate Tax and Estate Planning Changes After OBBBA

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, provides clarity for tax and estate planning while introducing new rules that affect charitable giving. Donors will experience these changes differently depending on how, when, and how much they give. Foundation staff play an important role in helping donors understand these shifts and plan effectively.

More Predictability for Tax and Estate Planning

OBBBA made several provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) permanent:

• Estate and gift tax exemption: Permanently increased to $15 million per individual (or $30 million per married couple) starting in 2026.
• Standard deduction: Permanently increased to $15,750 for single filers and $31,500 for married couples filing jointly in 2025.
• Top income tax rate: The current top rate of 37% remains in place rather than reverting to 39.6%.

This creates a rare period of stability for donors considering lifetime giving and estate planning.

New Charitable Giving Rules Effective in 2026

• Charitable deduction for nonitemizers: Allows up to $1,000 (single) or $2,000 (married filing jointly) for gifts to public charities, excluding donor-advised funds (DAFs).
• Deduction cap for top earners: Itemizers in the 37% bracket will have their charitable deduction limited to 35%.
• Giving floor for itemizers: Donors must give at least 0.5% of adjusted gross income (AGI) before charitable deductions apply.
• Cash gift limit: The 60%-of-AGI cap on cash gifts to public charities is now permanent.
• New deduction for donors 65+: Taxpayers age 65 or older can take a $6,000 deduction (2025–2028) whether they itemize or not, phasing out once modified AGI exceeds $75,000 (single) or $150,000 (married filing jointly).

Implications for Foundation Staff

Understand donor impact:

• High-income donors may want to give before the 35% cap begins.
• Donors who itemize will need to reach the new 0.5% AGI giving floor.
• Nonitemizers and donors aged 65+ gain new, modest deduction opportunities.

Be prepared to explain strategies:

• Bunching gifts (combining multiple years of giving into one) may help donors reach the new giving floor.
• The new nonitemizer and 65+ deductions could prompt additional giving.

Work with advisors: 

Offer clear, factual information and partner with donors’ legal and financial professionals to help them plan under the new rules.

Key Takeaway

Tax incentives are not the primary reason donors give, but they strongly influence how and when gifts are made. By understanding the OBBBA changes, foundation staff can better answer donor questions, support effective giving strategies, and maintain trust as donors plan in a shifting tax environment.