UPDATED JANUARY 12, 2026
Note: This summary reflects our best understanding as of Januarty 2026 and will very likely evolve as Treasury issues implementing regulations. Always consult a tax professional or legal advisor before acting on these provisions.
The One Big Beautiful Bill Act (H.R. 1)
Major Tax Changes Affecting Charitable Giving Updated: January 8, 2026 This summary reflects current law and publicly available guidance as of January 2026. Certain provisions will require additional IRS and Treasury regulations. Donors should consult a qualified tax or legal advisor before acting.New Tax Law Changes: What Donors Need to Know
On July 4, 2025, the One Big Beautiful Bill Act (H.R. 1) was signed into law, reshaping several tax rules that affect charitable giving, donor planning, and nonprofit funding strategies. Below is a donor-friendly summary of the most important provisions.The Big News: A Universal Charitable Deduction Is Now in Effect
Starting with 2026 tax returns, taxpayers who do not itemize may deduct cash gifts to qualified public charities up to:- $1,000 for single filers
- $2,000 for married couples filing jointly
- Applies only to cash gifts
- Applies only to public charities
- Does not apply to gifts made to donor-advised funds (DAFs), supporting organizations, or private non-operating foundations
Key Changes by Donor Situation
If You Take the Standard Deduction (About 90% of Taxpayers)
- Universal charitable deduction is now available
- $16,100 (single)
- $32,200 (married filing jointly)
If You Itemize Your Deductions
Rules now in effect (2026):- 0.5% AGI floor: Only the portion of charitable contributions exceeding 0.5% of adjusted gross income is deductible.
- High-income cap: The tax benefit of itemized charitable deductions is capped at approximately 35%, even if your marginal tax rate is higher.
- 60% AGI limit for cash gifts: The existing 60% of AGI limit for cash contributions to public charities is now permanent.
- Bunch multiple years of giving into one year to exceed the 0.5% floor
- Use donor-advised funds to time large itemized gifts (note: DAF gifts do not qualify for the universal deduction)
- Front-load pledges in a single tax year when itemizing
If You Support K–12 Education
New federal tax credit beginning in 2027- Up to $1,700 per taxpayer for donations to qualified Scholarship-Granting Organizations (SGOs)
- Credit is nonrefundable
- State participation is required
- Carryforward available for up to five years
Business Owners and Corporations
- New 1% floor for C-corporations (now in effect): Corporate charitable deductions are allowed only for amounts exceeding 1% of taxable income for the year.
- Excess contributions may still be carried forward under existing rules.
Other Tax Changes That May Affect Donor Planning
(Not Charitable Deductions)Temporary Seniors’ Deduction (Ages 65+)
From 2025 through 2028, eligible taxpayers age 65 or older may claim an additional above-the-line deduction of up to $6,000 per person ($12,000 for married couples where both qualify), subject to income phase-outs.- Phase-out begins at MAGI of $75,000 (single) / $150,000 (MFJ)
- Available whether you itemize or take the standard deduction
- Not tied to charitable giving
Five Smart Planning Moves
- Use the universal deduction: Non-itemizers can now receive a tax benefit for modest annual cash gifts.
- Bundle larger gifts when itemizing: Concentrating giving into a single year may help exceed the new 0.5% AGI floor.
- Use the K–12 credit strategically (2027+): In participating states, SGO donations may yield a dollar-for-dollar federal tax credit.
- If you’re 65+: Review eligibility for the temporary seniors’ deduction and how it affects overall tax planning.
- For corporations: Structure multi-year pledges so annual giving exceeds the new 1% taxable-income floor.
When Do These Changes Take Effect?
| Provision | Status |
|---|---|
| Universal charitable deduction ($1,000 / $2,000) | NOW IN EFFECT (2026) |
| 0.5% AGI floor & deduction value cap | NOW IN EFFECT (2026) |
| Corporate 1% charitable deduction floor | NOW IN EFFECT (2026) |
| Estate & gift tax exemption ($15M / $30M, indexed) | NOW IN EFFECT (2026) |
| Temporary seniors’ deduction (65+) | 2025–2028 |
| K–12 SGO federal tax credit | Begins 2027 |
Final Notes for Donors
- Keep proper receipts and acknowledgment letters for all gifts
- Some thresholds and mechanics will be finalized through IRS and Treasury guidance
- Tax incentives matter — but long-term impact and mission alignment remain paramount
How This Information Was Assimilated
- Benchmarked Industry Commentary
We began by reviewing how top financial firms and policy experts interpreted the bill, identifying trends, blind spots, and inconsistencies. - Analyzed the Bill Directly Using AI
We procured the full legislative text and ran it through three separate AI systems—each tasked with analyzing the document 5 times for clarity, contradictions, and key takeaways. - Compared AI Output Against Human Commentary
We cross-checked the AI-generated insights against the financial industry’s interpretations and refined the content where necessary to enhance clarity, accuracy, and practical use. - Human Oversight and Synthesis
Finally, experienced human reviewers interpreted, contextualized, and refined the output for nonprofit relevance and actionability.
Note: While we’ve aimed for precision, minor discrepancies may exist. Purely human interpretations often introduce greater variance—and occasionally, unintentional opinion masquerading as fact.
