Charitable Giving After the One Big Beautiful Bill Act

People don’t give to simply save on taxes. But taxes do change how people give. Instead of writing a check, for example, they advance their required minimum distribution (RMD). I have heard people argue that charitable giving would dry up if we eliminated the estate tax. I don’t believe that for a second––it’s not what I see when I sit across the table from families. What I do see is that tax law can be a helpful tool for giving more efficiently and effectively.

With the recent passage of the One Big Beautiful Bill Act, it’s worth looking at what changes are coming to the nonprofit sector and how we can help donors continue feeling supported and confident. Uncertainty, in my experience, does far more to dampen giving than any single tax provision ever will.

Giving to Heirs

People don’t give to simply save on taxes. But taxes do change how people give. 

The hard question people have to answer is how much to give to heirs and how to do it. More often than not, working through that answer often leads to a smaller number than the one they began with.

I recently worked with a doctor who had an estate of $14 million. He had enough to live on for the rest of his life, a determination I always start with in planning. So, the question then became how best to provide for his three children. After several discussions, here is how he broke it down:

• Outright gifts: $600,000 to provide $200,000 to each child after his passing
• Annual income: $3 million set aside in trust to pay each child $50,000 per year. After 20 years, any remaining principal would be added to the lump sum account.
• Lump sums: $2 million set aside in a separate trust for life events or emergencies.
• Final distribution: When the oldest reaches age 60, the trust would terminate and distribute whatever remained.

To meet the goals for his children, the doctor needed $5.6 million. That left $8.4 million for him to give to the IRS or to charity. He had no charitable intent prior to our meetings, but once he knew his family was taken care of, he had the clarity he needed to give generously and confidently.

Tax law may shape the gift, but people don’t usually give solely for a tax deduction. Because of that, our conversations need to focus on impact, not tax savings.

Changes Coming in 2026

With impact in mind, let’s take a look at what the One Big Beautiful Bill Act means for giving in the 2026 tax year and beyond.

For the vast majority of donors who take the standard deduction, about 90% of filers, there’s now a small but meaningful benefit. Instead of getting no tax savings at all, they can deduct up to $1,000 per person ($2,000 per couple) for their charitable gifts. It won’t motivate generosity on its own, but it does allow donors who are already giving to feel validated in the way they do it.

For those who itemize, most of the rules remain the same. Donors can still deduct up to 60% of AGI for cash gifts, and other deduction limits didn’t change. There are two small adjustments: the maximum tax savings for those in the top bracket drops slightly from 37% to 35%, and there’s a new “floor” of 0.5% of income before deductions can begin. Neither change is likely to alter giving behavior in any meaningful way.

The larger shift comes with estate and gift tax planning. The exemption has been permanently set at $15 million per person, adjusted for inflation. That means very few estates will ever face federal estate tax, eliminating one of the traditional nudges toward charitable giving. But again, this reinforces what experience already shows: people don’t give because they have to; they give because they want to.

The Bottom Line

Donors can now confidently structure their gifts, knowing the specific tax ramifications. 

For most donors, this bill doesn’t change much.  But since current laws were set to expire at the end of 2025, passing this law reduces uncertainty, which is one of the greatest threats to generosity. Donors can now confidently structure their gifts, knowing the specific tax ramifications. And for nonprofits, our role is to keep the focus where it belongs: making an impact.

©2025, Eddie Thompson, Ed.D., FCEP
Founder and CEO, Thompson & Associates

“If we merely aim for the industry standard, then our goal is mediocrity. Emulating the average nonprofit, we are destined to live with all the problems the average nonprofit faces. So, we suggest you aim to be exceptional in your approach to fund development.”