What the One Big Beautiful Bill Act means for charitable giving

Are your clients curious how the One Big Beautiful Bill Act (OBBBA) changes their giving strategy in 2026? Whether you have clients who give regularly or make large one-time donations, knowing how these new rules work can help them maximize their philanthropic impact—and potentially reduce their tax burden in the process. Keep reading to learn more about eight key tax law changes and what they mean for charitable giving in 2026 and beyond.

Changes coming out of the OBBBA

1. New limit on all itemized deductions 
For clients in the 37% federal income tax bracket, the value of their charitable deduction benefits is now capped at 35%. In other words, their tax benefits are capped at 35 cents for every dollar they donate.

What this means for your clients: If they itemize deductions, their donations will still count in full, but their tax break will be a bit smaller. For example, if a client in the 37% tax bracket donated $10,000, their tax savings would be capped at $3,500 (35%) instead of $3,700 (37%).

Moves to consider:

• Planning is key: Discuss strategies with your clients and their tax professionals to potentially reduce their taxable income and limit the amount of money taxed at the highest rate. Consider maximizing contributions to tax-advantaged accounts or looking for ways to defer income, along with charitable donations.

2. New hurdle to jump before clients can take a donation deduction
For 2026 onward, anyone who itemizes and wants to take a deduction for a charitable donation will need to exceed a 0.5% floor before they can claim that donation as an itemized deduction. The 0.5% floor is multiplied by the donor's adjusted gross income (AGI) to determine the portion of their donation that is disallowed.

What this means for your clients: Smaller donations may no longer reduce their tax bill unless they clear this new threshold. For example, if your client's AGI is $200,000, only gifts above $1,000 will be deductible.

Moves to consider:

• Bunch gifts: Donors may combine several years' worth of donations into one tax year to clear the deduction floor.
• Look at all assets: Donating appreciated stock, real estate, and other non-cash assets may help your clients exceed the floor while unlocking additional tax advantages.

3. Universal deduction for non-itemizers
Clients who take the standard deduction can now also deduct up to $1,000 (single filers) or $2,000 (married couples filing jointly) for cash gifts to qualified operating charities, with inflation adjustments over time. Keep in mind, the deduction excludes donor-advised fund (DAF) contributions.

What this means for your clients: Even without itemizing, donors can still lower their tax bill while supporting causes and charities they care about.

Moves to consider:

• Max it out: For charitably-inclined clients, consider whether contributing the full allowable amount each year to claim the deduction makes sense. In addition, many employers will match charitable donations up to certain limits, so encourage clients to take advantage of employer matching gift programs when available. 

What's extended from the Tax Cuts and Jobs Act

1. Permanent income tax brackets
The OBBBA makes current income tax brackets and rates permanent, removing uncertainty around future rate hikes. For 2026, the 10% and 12% tax brackets will also see an additional inflation adjustment.

What this means for your clients: With rates no longer set to expire or revert to higher pre-2018 levels, you can help clients plan their charitable giving with more confidence.

Moves to consider:

• Plan thoughtfully: Explore a multi-year giving strategy to maximize your clients' potential tax benefits. You could also collaborate with their tax advisor to develop a holistic approach.

2. Continued higher standard deduction
For the 2026 tax year, the standard deduction increases to $16,100 (single filers) and $32,200 (married couples filing jointly), with annual inflation adjustments to follow.

What this means for your clients: The higher threshold makes it important to check whether their charitable giving deductions, combined with other itemized deductions, exceed the standard deduction.

Moves to consider:

• Bunch gifts: Consolidate multiple years of donations into a single year to maximize tax benefits. A bunching strategy helps donors take advantage of both itemized and standard deductions.
• Use the new non-itemizer donation deduction: See item #3 above for more information on the universal deduction for non-itemizers.

3. Permanent 60% AGI limit 
The ability to deduct cash gifts to public charities up to 60% of AGI is here to stay.

What this means for your clients: This higher limit (up from the historical 50% cap) gives donors more flexibility to make and fully deduct large cash gifts in a single year. Keep in mind, the 60% limit applies to public charities, including DAFs. Cash donations to private foundations remain capped at 30%.

Moves to consider:

• Carry it forward: For gifts that exceed the annual cap, your clients can carry forward the unused deduction for up to five tax years.

4. Increased estate and gift tax exemption 
The exemption increases to $15 million per single filer ($30 million for married couples filing jointly) for 2026, with future inflation adjustments.

What this means for your clients: They can transfer more wealth to their heirs without federal taxes. While clients may feel less urgency to give for estate tax reasons, charitable gifts can still reduce their taxable estate if their assets exceed the exemption.

Moves to consider:

• Plan charitable legacy: Work with your clients to make sure their estate plan reflects their charitable intentions and considers this new exemption level. You can also encourage clients to name charities or their DAF account as direct beneficiaries.

5. Higher state and local tax (SALT) deduction cap (with limits)
The SALT deduction cap for itemizers rises to $40,000 in 2026 and will increase 1% annually through 2029. Income limits apply, but the deduction phases out for households with modified AGIs above $505,000 (or $252,500 for married individuals filing separately), and it reverts to a $10,000 cap in 2030.

What this means for your clients: If they're under the income limit, the higher cap may help them increase their itemized deductions and the tax benefit of charitable giving.

Moves to consider:

• Leverage the cap: If giving is important to your clients, talk with them to see if charitable donations could boost their overall deductions.
   

What you can do next

With the OBBBA and 2026 IRS adjustments in place, now is the time to discuss ways to help your clients optimize their giving strategy for 2026 and beyond.

• Talk to your clients about their charitable giving goals and how these tax law changes may affect them. See these conversation starters for tips.
• Review your clients' overall financial plan and see how charitable giving fits into it.
• Explore the tax-smart giving strategies outlined above and consider how a DAF account could help your clients make a greater charitable impact.

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