How OBBBA Reshapes Charitable Giving

Starting in 2026, the One Big Beautiful Bill Act (OBBBA) brings significant changes to charitable giving that will impact high-net-worth individuals, business owners, and executives who regularly contribute to public charities. Understanding these changes is critical to ensure your giving strategy remains tax-efficient and aligned with your long-term philanthropic goals.

Key Changes Under OBBBA

OBBBA introduces new rules that affect both itemizers and non-itemizers:

• Non-itemizers: Individuals who do not itemize deductions now have a new above-the-line charitable deduction for cash gifts to qualifying public charities. The maximum deduction is $1,000 for single filers and $2,000 for married couples filing jointly. This is a meaningful incentive for donors who previously could not deduct any charitable contributions.
• Itemizers: For those who itemize deductions, only gifts exceeding 0.5% of Adjusted Gross Income (AGI) are deductible. High-income donors in the top federal tax bracket will see a reduced marginal tax benefit per dollar donated, capped at 35% instead of the historical 37%.
• Cash gifts: The former 60% of AGI ceiling for cash donations to public charities is now permanent. This ensures that high-volume donors can still deduct substantial contributions, although deductions are subject to the new 0.5% floor and the cap rules.
• Corporate giving: For corporations, only charitable contributions that exceed 1% of taxable income will be deductible. This change is likely to reduce sporadic corporate giving while encouraging larger, strategic donations.

In short, OBBBA broadens giving deductibility access for non-itemizers but reduces deduction value for many itemizers and adds complexity for high-income individuals and corporate donors.

Why This Matters for High Earners & Business Owners

For high-net-worth individuals and business owners, these changes create both challenges and opportunities:

• Reduced tax efficiency for routine giving: For many high earners, the first 0.5% of donations will no longer be deductible. For example, with an AGI of $1 million, the first $5,000 of contributions won’t provide any tax benefit.
• Lower marginal tax benefit per dollar: Top-bracket donors will see the tax savings on each donated dollar drop slightly from 37% to 35%. While this may seem small, on large contributions it can translate to meaningful tax differences.
• Planning complexity: Timing and strategy now matter more than ever. Whether you give this year or next can impact the tax efficiency of your gifts.
• Corporate giving shifts: Smaller, sporadic corporate donations may no longer make sense. Companies may prefer consolidating larger gifts to exceed the 1% of taxable income threshold.

Essentially, spreading donations out over multiple years may reduce tax advantages under OBBBA. Thoughtful planning is now crucial, especially for multi-year philanthropic commitments or significant donations.

Trusted Planning from Financial Professionals

Many financial advisors emphasize proactive, integrated planning under OBBBA:

• Many recommend accelerating gifts or pre-funding donations before the end of 2025, locking in a higher deduction value under the old rules.
• Donor-advised funds (DAFs) remain powerful tools for “bunching” multiple years of gifts into one tax-efficient year.
• Qualified charitable distributions (QCDs) from IRAs can still be highly tax-efficient, especially for older philanthropists or those nearing retirement. QCDs bypass AGI floors and ceilings while reducing taxable income.
• Estate and gift-tax planning remains critical. The permanent higher lifetime exemptions ($15M individual / $30M couple) encourage integrating philanthropy with legacy planning.

In short, high-income donors should view charitable giving strategically, integrating tax planning, retirement planning, and wealth transfer considerations.

Strategic Moves — What to Do Now and Long-Term

Before December 31, 2025:

✅ Accelerate large gifts under the old rules to maximize deduction value.
✅ Bunch multiple years’ donations through DAFs or pre-funded pledges.
✅ Review recurring or smaller gifts; consider consolidating for efficiency.
✅ Consult your tax or wealth advisor about retirement-based giving options, including QCDs.

2026 and Beyond:

• If itemizing, give above the 0.5% AGI floor to maximize deductions.
• Combine cash gifts with non-cash assets, such as appreciated securities or real estate.
• Explore alternative vehicles like charitable remainder trusts or family foundations for legacy giving.
• Integrate giving with estate and wealth-transfer planning to align philanthropy with long-term goals.
• Model giving over multiple years to optimize timing, income, and deduction benefits.

Why Plan Generosity Strategically?

OBBBA reshapes charitable giving incentives:

• The 60%-of-AGI ceiling ensures very large gifts are still feasible for donors who plan carefully.
• Non-itemizers gain new, modest deductions that broaden the base of philanthropic participation.
• High-net-worth donors are encouraged to take a deliberate, long-term approach that aligns giving with legacy and financial planning.

For business owners, executives, and other high earners, this is a call to think beyond the deduction—focusing on how gifts support values, legacy, and long-term wealth strategy.

Next Steps

1. Simulate giving scenarios for 2025 vs. 2026+ to understand tax impacts.
2. Consider pre-funding large or multi-year gifts in 2025.
3. Schedule a review with a tax or wealth advisor if you anticipate significant contributions over the next 3–5 years.
4. Explore alternative giving strategies: DAFs, QCDs, charitable trusts, or non-cash gifts.
5. Update philanthropic and estate plans to align with new rules, including gift-allocation strategies, timing, and documentation.

Conclusion

OBBBA represents a turning point in charitable giving. While traditional giving habits may lose some tax advantages, high-net-worth donors who plan strategically can leverage tools like bunching, donor-advised funds, QCDs, and integrated estate planning to give more efficiently, creating more impact.

RFG Wealth Advisory can help model giving scenarios and design personalized giving and estate strategies for 2025 and beyond. Contact us today to ensure your philanthropy aligns with your values, legacy, and financial goals.

Disclaimer:
Investment advice is offered through RFG Wealth Advisory, a Registered Investment Advisor. This material is for informational purposes only and should not be considered tax, legal, or financial advice. Consult a qualified professional before acting on this information, as tax laws and OBBBA provisions are complex and subject to change.