Public Law 119-21, signed into law on July 4, 2025, included several provisions impacting charitable giving. Some donors may find it more advantageous to make larger contributions in 2025. BCF recommends you meet with your tax advisor now to ascertain how best to take advantage of the tax law changes before year-end.

Tax Law Changes in Effect in 2025

• In 2025 the standard deduction for individuals increases to $15,750 (or $31,500 for married couples filing jointly). Given the increase we recommend you closely evaluate whether your charitable giving plus other itemized deductions exceed the standard deduction amount. You may find bunching donations within a single year to be an effective strategy.

• Adjusted Gross Income (AGI) limits: The new law extends the existing ability to deduct up to 60% of AGI for cash contributions to 501 (c)(3) public charities.

Tax Law Changes Beginning in 2026

• New Above the Line Deduction for Non-Itemizers:
  
  • Previously only taxpayers who itemize could deduct charitable contributions. Beginning in 2026, individuals who do not itemize (e.g. those taking the standard deduction) may deduct up to of $1,000, or $2,000 for married couples filing jointly.

• New Rules for Itemizers:
  
  • New Limit to Deductions for Itemizers in Top Bracket. Tax benefits of itemized charitable deductions are capped at 35% (even for those in the 37% tax bracket). Thus, a high-income filer donating $1,000 will receive a $350 deduction instead of the current $370.
  • New Floor on Deductions for Itemizers. Effective in 2026, itemizers who make charitable contributions may only claim a deduction to the extent qualified contributions exceed 0.5% of their adjusted gross income (AGI). For example, a couple with an AGI of $300,000 could only deduct charitable donations in excess of $1,500.

How Can You Respond?

For some donors, accelerating donations in 2025 may result in greater tax benefits. BCF will work with you and your tax advisor to ensure you maximize your tax benefits while achieving your philanthropic goals.

We encourage you to consider giving more in 2025 because:

• No AGI Floor in 2025: There is no adjusted gross income (AGI) floor for itemized charitable deductions, meaning every dollar donated up to normal IRS limits is deductible.
• No Limit to Deductions for Itemizers in 2025: Donors in the top 37% tax bracket can claim the full 37% benefit for charitable contributions.
• Itemizing Easier in 2025: The increased cap on state and local taxes (SALT) (up to $40,000 in 2025 from $10,000 in 2024) makes it easier for more taxpayers to itemize. (This increased deduction phases out for taxpayers with incomes over $500,000.)

“Bunching” is an effective strategy to achieve greater deductions. Simply accelerate your giving in 2025 to include donations for future years resulting in a greater tax benefit for 2025. For example, if you plan to give $10,000 to a nonprofit annually you can bunch three years of donations in a BCF Donor Advised Fund (DAF) to receive the benefit of a $30,000 donation in one tax year. Then, as a DAF fundholder you may recommend grants from your DAF per your desired timeframe, in this case three years.