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How the New Tax Legislation May Affect Your Gift Planning
In 2017 the Tax Cuts and Jobs Act (TCJA) was enacted. It was the most comprehensive tax overhaul in three decades. Many provisions of the act were scheduled to automatically expire at the end of 2025 unless renewed. The legislation, popularly known as the One Big Beautiful Bill Act (OBBBA) and signed into law on July 4, 2025, did, in fact, extend most provisions of TCJA, including the current tax brackets ranging from 0% to 37%. This means that the tax cuts in the 2017 TCJA remain mostly intact.
Here are some of the provisions of OBBBA that will have an impact on your charitable gift planning. Most of these provisions will begin in 2026.
- Although the tax brackets will remain the same, the dollar amounts of each bracket will change because the brackets are indexed for inflation.
- The standard deduction will increase annually due to adjustments for inflation, which is now $15,750 for single filers and $31,500 for a married couple filing jointly.
- An additional $6,000 amount might be added to the standard deduction for persons 65 and older in 2025-2028, depending on income.
- Non-itemizers can deduct an additional $1,000 ($2,000 in the case of a couple filing jointly).
- The federal gift- and estate-tax exemption will be increased to $15 million ($30 million when the exemptions of a married couple are combined).
- High-income taxpayers in the 37% tax bracket can claim a 35% tax deduction instead of the full 37%.
- An itemizer’s charitable contributions are deductible only to the extent that contributions exceed 0.5% of adjusted gross income.
- Certain college and university endowments may be subject to a higher tax rate.
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