2025 Tax Code Changes

2025 Tax Code Changes

How They Impact Charitable Giving and What Nonprofits Should Do Before Year-End

As year-end fundraising hits full stride, the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, brings major tax reforms affecting how donors—especially in 2026—donate to nonprofits. Here’s what nonprofits and their supporters must know:

Key Tax Changes Affecting Giving

Key Tax Code Changes Affecting Giving New Universal Deduction for Standard-Filers

1. New Universal Deduction for Standard-Filers

Starting in 2026, individuals will be able to claim up to $1,000 ($2,000 jointly) in cash donations even if they don’t itemize.

2. 0.5% AGI Floor for Itemizers

Also in 2026, itemizers may only deduct donations that exceed 0.5% of AGI.

  • Smaller recurring donations may no longer yield tax savings.
3. 35% Deduction Cap for High-Income Earners

Gift deduction benefit for top-bracket taxpayers (37%) drops to 35% starting in 2026.

4. Expanded SALT Cap Benefits and Corporate Changes
  • SALT deduction rises to $40,000 AGI ≤ $500K.
  • C-corps now face a 1% floor, up from 0.5%.

Five Practical Ways Nonprofits Should Respond Now

1. Encourage Gifts Before 2026
  • Highlight benefits of giving in 2025: full 37% deduction, no floor, no cap.
  • Promote early 2026 gifts using Universal Deduction.
2. Target Non-Itemizers with Clear Messaging
  • Around 90% of households currently take the standard deduction.
  • Frame direct cash gifts: “Now qualifies for a tax deduction—even if you don’t itemize.”
3. Equip Major Donors with Bunching & Structuring Tools
  • High earners are likely to leverage DAFs, multi-year pledges, appreciated securities, and QCDs.
  • Offer clear guides explaining options like QCDs for age 70½+.
4. Avoid Giving Legal Advice But Provide Educational Tools
  • Share simple calculator tools, FAQs, or visuals explaining the floors and caps.
  • Always include a brief “Check with your tax advisor” disclaimer.
5. Segment Communications by Donor Type
  • Use fundraising analytics to tailor messages to everyday, mid-level, and major donors.
  Example Messaging:
  1. Everyday Donors: “Your $1,000 gift deductible in 2026 even without itemizing.”
  2. Mid-Level: “Ensure total donations exceed the 0.5% AGI floor.”
  3. Major Donors: “Consider accelerating gifts now or bundling into a DAF/QCD.”

Final Thoughts

These tax code changes are more than financial tweaks—they’re catalysts for renewed engagement, smarter stewardship, and year-round giving strategies. By:

  • Educating donors clearly and confidently
  • Segmenting outreach based on tax and income scenarios
  • Spurring early giving while highlighting post-2025 opportunities

Nonprofits can maintain momentum—and even boost generosity—despite evolving tax landscapes. This season, your organization has both the opportunity and the tools to foster generosity, not confusion.

Ready to Maximize Your Impact?

Tax law changes can feel overwhelming—but they also create opportunities for smarter giving and stronger fundraising. Get in touch with an expert at IDM today to learn how to leverage these new rules and optimize your year-end strategy. From donor education to campaign planning, IDM is here to help with all your nonprofit fundraising needs.

Amy Agbokpanzo