Changes to Tax and Estate Planning After OBBA

The OBBBA made several key provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) permanent, including the following:

• Estate and Gift Tax Exemption. This was not only made permanent but further increased to $15 million per individual ($30 million per married couple) in 2026.
• Standard Deduction. This was also made permanent, rising to $15,750 (single filers) and $31,500 (married couples filing jointly) in 2025.
• Top Income Tax Rate. The current tax rates were made permanent, including the top 37% bracket (which had been scheduled to revert to 39.6%).

This rare window of predictability allows taxpayers to plan with confidence—especially helpful for donors considering estate gifts or lifetime giving strategies.

The OBBBA introduced new rules that take effect in 2026 and will impact donors in various ways:

• Charitable Deduction for Nonitemizers. Nonitemizers can deduct gifts to public charities up to $1,000 (for single filers) or $2,000 (for married couples filing jointly), excluding those made to donor-advised funds (DAFs). Since the TCJA introduced a higher standard deduction in 2017, many donors no longer itemize and therefore lose out on charitable deductions. This deduction is a useful alternative for nonitemizers that has the potential to increase interest in charitable giving.
• Deduction Cap for Top Earners. Itemizers in the top 37% tax bracket will see their charitable deductions capped at 35%. High-income donors thinking about making a significant gift should consider giving this year. The difference between 37% and 35% may seem small, but this slight decrease in deductibility can result in a sizable loss of tax savings on major contributions.
• Giving Floor for Itemizers. Donors will need to give at least 0.5% of their adjusted gross income (AGI) before beginning to deduct charitable gifts. For example, a donor with an AGI of $200,000 can only deduct any gift amount over $1,000. Donors will need to pay even more attention to the timing and amounts of their gifts. Strategically bunching gifts for multiple years into one year (essentially, giving larger gifts less frequently) will likely play a larger role in charitable giving to compensate for this floor.
• Permanently Higher Deduction Limit on Cash Gifts. The TCJA’s 60%-of-AGI cap on cash gifts to public charities is now permanent. While this is good news, donors should continue to explore alternatives to cash gifts to identify the tax and planning benefits that are best aligned with their goals and circumstances.
• New 65+ Deduction. In 2025–2028, taxpayers age 65 or older can take a $6,000 deduction whether they itemize or not—a deduction that phases out once modified AGI exceeds $75,000 (single filers) or $150,000 (joint filers). This may free up additional money for meeting charitable goals.

Tax incentives aren’t the main reason people support charitable organizations, but they do influence how and when they give. It will be important for you to understand these changes and help donors plan effectively under new rules that reshape donor incentives and obligations.

• Encourage high-income donors to give before year end, either directly or by contributing to a DAF.
• Highlight the bunching strategy for donors who won’t meet the new floor for itemizers.
• Help donors age 65 and older explore how to best utilize the money freed up as a result of the new deduction—potentially allocating some or all of it toward meeting charitable goals.
• Remind donors that you can collaborate with attorneys and advisors, provide information or illustrations, or help them explore their options.

Donors are sure to have questions. You can be ready with answers and options.

Several key provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) were scheduled to expire at the end of 2025. The OBBBA made them permanent, giving you more clarity for long-term planning:

• The estate and gift tax exemption rises to $15 million per person ($30 million per married couple) in 2026.
• The standard deduction increases to $15,750 (single filers) and $31,500 (married couples filing jointly) in 2025.
• The top income tax rate remains at 37% (rather than reverting to 39.6%).

This greater stability makes it easier to plan ahead—especially if you’re thinking about making legacy gifts or larger charitable contributions during your lifetime.

Starting in 2026, new rules take effect that may influence how you approach charitable giving, including the following:

• A new deduction for nonitemizers. If you don’t itemize, you’ll still be able to deduct charitable gifts up to $1,000 (for single filers) or $2,000 (for married couples filing jointly), as long as the gift is made to a public charity like ours (not a donor-advised fund). If you have been taking the standard deduction instead of itemizing, this may create a new incentive to give.
• A deduction limit for high-income donors. If you’re in the top income tax bracket (37%) and itemize your taxes, your charitable deductions will be limited to 35% of your income. The difference may seem small, but this slight decrease in deductibility can result in a sizable loss of tax savings on major contributions. If you’re thinking about making a significant gift, you may want to consider doing so before the end of the year.
• A “giving floor” for itemizers. To deduct charitable gifts, itemizers must now give at least 0.5% of their adjusted gross income (AGI). For example, someone with an AGI of $200,000 would need to give more than $1,000 before being able to claim any deduction. Consider whether it makes sense to combine two or more years’ worth of giving into one year—a strategy known as “bunching.”
• A permanently higher deduction limit on cash gifts. The current 60%-of-AGI cap on deductions for cash gifts to public charities is now permanent. While that’s good news, you should continue to explore whether alternatives to cash gifts can provide tax and planning benefits that are better aligned with your goals and circumstances.
• A new 65+ deduction. If you are age 65 or older, you can take a $6,000 deduction in tax years 2025–2028, whether you itemize or not. The deduction phases out once your modified AGI exceeds $75,000 (single filers) or $150,000 (joint filers). This may free up additional money for meeting charitable goals.

These changes won’t affect why you give—but they may influence when and how you give. Smart planning can help you maximize your impact and potentially reduce your taxes.

Here are a few steps to consider:

• If you’re in a high tax bracket, ask your advisor whether it makes sense to give in 2025, before the new limits take effect.
• If you give annually but won’t meet the new deduction floor, consider combining two or more years of giving into one larger gift.
• If you don’t itemize, don’t forget about the new deduction available to you starting next year.
• Talk to your advisors—and talk to us. We’re always here to help you explore your options, provide information, run gift illustrations, or work with your legal and financial team.