The One Big Beautiful Bill Act (OBBB) makes several changes to the charitable deduction beginning in 2026, including introducing new limitations for corporations and high-income individuals while boosting the deduction for non-itemizing taxpayers.
Joe Phoenix – the CEO of Givinga, a financial technology company focused on philanthropy – shared his advice as corporations and individuals reevaluate their charitable giving in 2025 and beyond.
Corporations and High Net-Worth Donors
The OBBB establishes a 1% floor on corporate charitable deductions, as well as a 0.5% floor on charitable deductions against adjusted gross income (AGI) for individual itemizers. The market is interpreting these floors to mean that deductions can only be taken on contributions made after the respective thresholds are met, Phoenix told Checkpoint. For individuals in the highest tax bracket (37%), the value of their deduction will also be slightly reduced, from 37 cents to 35 cents per dollar contributed, he added.
Given these changes and lingering uncertainty about the details, Phoenix’s advice to corporations and individual itemizers is to act before the new provisions take effect in 2026. The primary strategy for both of these types of donors is to accelerate, or “bunch,” their giving into 2025, he explained.
“If you are active and you are budgeting year in and year out for charitable giving, you should really think about taking 2026 and 2027 and really moving them forward into 2025 when you know what the tax law is,” said Phoenix.
For corporations, Phoenix suggests making larger contributions in 2025 to take advantage of the current, more favorable deduction rules. A carry-forward provision allows corporations to deduct excess contributions over the next five years based on 2025 tax law, he added.
High net-worth individuals, meanwhile, should consider using vehicles like donor advised funds to pre-fund multiple years of giving in 2025, Phoenix explained. This allows them to secure a deduction under the current, more generous rules before the new 0.5% floor and reduced deduction rate for the top bracket kick in.
“My two words of advice would be ‘move now,'” Phoenix stated. “Don’t wait, get in front of it.”
New Deduction for Non-Itemizers
While the OBBB imposes new limitations on the charitable deduction for corporations and individual itemizers, it boosts and makes permanent the deduction for individuals who do not itemize. Specifically, it allows non-itemizers to deduct up to $1,000 ($2,000 for married couples filing jointly).
“We think that is phenomenal for charitable giving. That’s the door that has opened,” Phoenix said. He noted that the provision will allow people who take the standard deduction to receive “additional tax deductions just by contributing to charity.”
Phoenix said that technology companies like Givinga are already working to create new products that allow donors to easily access this new tax benefit. “One thing that technology companies are good at is adapting to change,” he explained.
“Within the next month, as we get towards ‘Giving Tuesday’ and then into December, you’ll start to hear more and more about ways that people are going to be able to use technology to access this new tax deduction,” said Phoenix.
Future Outlook
For Phoenix, the OBBB changes recall the uncertainty that followed the 2017 Tax Cuts and Jobs Act, which significantly raised the standard deduction. While charitable giving initially dipped, he explained, it recovered strongly in subsequent years, which he attributes to the “American giving mentality.”
Phoenix also had a key criticism of the new law. A notable “missed opportunity,” he said, is a restriction that prevents the new non-itemizer deduction from being used for contributions made to donor advised funds. “That’s problematic, because a lot of the growth in this industry, specifically from the technology side … has revolved around introducing individuals to the donor advised fund,” Phoenix explained.
The restriction is misguided, he added, because modern, technology-driven donor advised funds are no longer “buy and hold” products. He described them instead as “engines of giving that this new generation of technology companies is developing.” In Phoenix’ view, “technology allows you to accumulate, but it then also allows you to disperse super efficiently.”
Looking forward, some experts see additional opportunities for improvement. For example, the Tax Policy Center’s Robert McClelland has proposed a “tax-day deduction,” to allow taxpayers to make deductible contributions up until they file their taxes. McClelland says this longer timeline would give taxpayers a clearer picture of their tax liability and deduction opportunities.
Phoenix strongly supports this idea of allowing individuals to donate right up to Tax Day, when they “understand what their tax liability is, understand what their deduction opportunity is.”
While there’s room for improvement, Phoenix believes that overall, the philanthropic sector is entering a “golden age.” Technology is “opening the market to a very large group of people that really is socially conscious, socially aware,” he added.
For more on charitable contributions deductions, see Checkpoint’s Federal Tax Coordinator 2d ¶ K-2800.
Take your tax and accounting research to the next level with Checkpoint Edge and CoCounsel. Get instant access to AI-assisted research, expert-approved answers, and cutting-edge tools like Advisory Maps and State Charts. Try it today and transform the way you work! Subscribe now and discover a smarter way to find answers.
