With the passage of the One Big Beautiful Bill Act, we now have certainty about future tax rates and brackets, increased tax exemptions and increased state and local income tax deductions. A recent article, “Charitable Planning Under OBBBA: Key Considerations for Advisors and Donors in 2025,” from the American Heart Association, provides a wealth of information about how the OBBBA impacts charitable giving and estate planning under the new tax law.
The standard deduction increased for 2025, and seniors now get an enhanced deduction of $6,000 for anyone age 65 or older. And starting in 2026, if you itemize, charitable contributions are subject to a .5% floor based on Adjusted Gross Income. Only donations exceeding 0.5% of AGI are deductible.
For example, let’s say a married couple has an AGI of $200,000. They donate $10,000 to qualified charities. The deduction is reduced by 0.5% of $200,000, or $1,000. The allowed charitable deduction amount is $9,000.
For those who don’t itemize, starting in 2026, there will be a partial charitable contribution deduction. Unmarried taxpayers can claim up to $1,000, and married taxpayers may claim up to $2,000 as a charitable deduction on top of standard deductions.
What should philanthropically minded people do? Consider front-loading charitable gifts before the new limitations become effective. Take advantage of Donor Advised Funds (DAFs). If appropriate, consider the Qualified Charitable Distribution (QCD).
Transferring appreciated securities to a DAF is an effective way to get a deduction for the securities’ value now and donate to charities later. As markets are currently at record highs, there may be unrealized gains in stocks, mutual funds and ETFs. Transferring appreciated assets from a brokerage account directly to a DAF also avoids capital gains on the unrealized gains. Donations to specific charities from the DAF can be made later. Just be sure that enough appreciated securities are transferred to itemize. Transfer more than the amount of the standard deduction—known as “lumping” deductions. Do this in 2025 before limitations begin.
If you’re 70 ½ or older, talk with your estate planning attorney about the wisdom of making all charitable contributions directly from your IRA to the charity. Doing so has many benefits.
The QCD (Qualified Charitable Distribution) fulfills the Required Minimum Distribution. Let’s say that your RMD is $20,000 and you don’t need it, and plan to donate it to a charity you care about. By giving the $20,000 directly from the IRA to the charity, you’ve fulfilled your RMD requirement and removed the $20,000 from taxable income.
By reducing taxable income, you may reduce Medicare premium surcharges or any other AGI/taxable income considerations. The maximum QCD in 2025 is $108,000, and there is a once-in-a-lifetime QCD rollover of up to $54,000 for 2025 into a Charitable Gift Annuity.
Another tool to consider is the Charitable Gift Annuity, or CGA. Cash or appreciated securities may be used to establish the CGA, which creates a tax deduction for the present value of the gift and lifetime income for you and a beneficiary. A portion of the revenue is tax-free, and the rest is ordinary income. If appreciated securities are donated, a portion of the income will be treated as capital gains. The charity receives the remainder of the annuity upon the death of the last beneficiary.
These are good ways to do good while reducing your tax bills in 2025. Talk with your estate planning attorney so you have a good understanding of how the OBBBA impacts charitable giving and estate planning, as 2026 will present limitations for charitable deductions. If you would like to learn more about charitable giving and tax law, please visit our previous posts.
Reference: American Heart Association (Nov. 13, 2025) “Charitable Planning Under OBBBA: Key Considerations for Advisors and Donors in 2025”
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