BIG BEAUTIFUL BILL TAX IMPLICATIONS

Charitable giving gets some new opportunity under the new “One Big Beautiful Bill Act.” The current standard deduction, $15,000 for single filers and $31,500 for joint filers, makes it difficult to itemize over those amounts and get tax benefit for your charitable donations. But effective starting in 2026, “non-itemizers” will be able to deduct charitable donations of $1,000 for single filers and $2,000 for joint filers, with no other limitations.

Under the new act, if you have high taxable income and you itemize your deductions, you may want to consider maximizing your donations in the tax year 2025, rather than taking them in 2026. Starting in 2026, your charitable donations have to be reduced by .5% of your adjusted gross income. For example, if your adjusted gross income is $1,000,000, you would have to reduce your charitable donations by $5,000. In addition, under the Act starting in 2026, the tax benefit for all of your itemized deductions is limited to a 35% tax rate. So, if you are in the maximum tax rate of 37%, your tax benefit for total itemized deductions will be limited to 35%.

Left in place by the new act, seniors who are currently required to take taxable distributions from their retirement accounts, can still redirect some or all of it to charitable giving, and thereby escape tax on that part of the required distribution. And for this tax break, you get it even if you don’t itemize your deductions.

As with any new tax bill, it carries a lot of nuances that have yet to be interpreted by Internal Revenue Regulations. Be sure to consult with your personal tax advisor.

Submitted August 28, 2025
Written by Sparky Parker, CPA