As the end of 2025 comes rushing towards us, it’s important to be aware of the changes in the tax law that will impact charitable giving this year and in the years to come. These changes are part of HR 1, “The One Big Beautiful Bill“, which President Trump signed into law earlier this year.
SALT Deduction Increase (2025 Impact)
The maximum deduction for state and local taxes (SALT), which are property, sales and income taxes, has been increased starting in 2025 from the current cap of $10,000 to $40,000. While this deduction does phase down for taxpayers making over $500,000 and sets a maximum of $10,000 for those making $600,000 or more, it could make a real difference on year-end giving this year. For example, if a taxpayer hasn’t itemized their tax deductions in past years, this deduction alone may put them over the standard deduction threshold which is $15,750 for singles and $31,500 for married couples filing jointly. If they do end up itemizing it could encourage more year-end giving to maximize their tax savings.
New Limits on Charitable Deductions (Starting 2026)
Another provision that could impact year-end giving is the fact that the Bill places a floor on the deductibility of charitable donations of 0.5% of adjusted gross income (AGI) beginning next year. This means that starting in 2026 you can only deduct charitable contributions above 0.5% of AGI. Also starting in 2026, a cap of 35% of AGI has been imposed on charitable contributions. So taxpayers in the 37% tax bracket will not be allowed to gain the full deduction for donations.
It’s likely that many high-net-worth families may accelerate giving into 2025 rather than 2026 to get the higher tax savings of current policy.
Deduction for Non-Itemizers (Starting 2026)
There is a provision in the Bill for those who take the standard deduction when filing their tax return that will not impact 2025 giving, but could create a stimulus for more people to give or to give more starting in 2026. This provision, effective beginning in 2026, allows non-itemizers to deduct $1,000 of charitable contributions for single filers and $2,000 for married couples filing jointly. Some studies have shown this could generate $17 billion in additional giving.
So as we come to the end of 2025, be mindful that high-net-worth families may be looking to gain the tax advantage of giving more this year, so make a strong case to your major donors for their year-end giving. And for your mid-level donors, there is a chance that the change in the SALT deduction could push them to itemize this year, thus an opportunity that charitable giving could maximize the impact of their deductions.