Charitable Giving and the 2025 Tax Law

October 21, 2025

Americans give hundreds of billions of dollars to charity each year, supporting organizations that make a difference in everything from hunger relief and health care to education and disaster recovery. Giving to causes you care about can be deeply rewarding—and it may also come with meaningful tax benefits.

The new tax legislation passed in July 2025 brings important updates to the rules governing charitable deductions. These changes could influence when and how donors choose to give, especially for those who itemize deductions. While most of the new provisions don’t take effect until 2026, donors may find 2025 an especially strategic year for charitable contributions.

Below is a summary of the three key provisions that could shape giving strategies in the coming years.

1. A Permanent Deduction for Non-Itemizers

Beginning in 2026, taxpayers who take the standard deduction will once again be able to claim an “above-the-line” deduction for cash contributions to qualified charities—up to $1,000 for single filers or $2,000 for joint filers.

This deduction won’t apply to gifts made to donor-advised funds or private non-operating foundations, and the limits are not indexed for inflation.

This change could encourage more households to give. Since the 2017 Tax Cuts and Jobs Act greatly increased the standard deduction, only about one in ten households have itemized in recent years. The return of a universal charitable deduction means that even those who don’t itemize can still enjoy a tax benefit from giving.

A similar, temporary provision was available under the CARES Act during the COVID-19 pandemic, allowing deductions of $300 for individuals and $600 for joint filers—and about 90 million taxpayers took advantage of it.

2. A New “Floor” on Deductions for Itemizers

Starting in 2026, taxpayers who itemize will only be able to deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI).

For example, a household with $300,000 in AGI would only be able to deduct charitable gifts that exceed $1,500.

This new threshold effectively reduces the portion of charitable giving that’s deductible for higher-income taxpayers. As a result, donors who itemize may want to consider the timing of their contributions. Making larger, less frequent donations—sometimes called a “bunching” strategy—could help maximize deductions. Many may also find it worthwhile to accelerate planned gifts into 2025, before the new rule takes effect.

3. A Cap on Charitable Deductions for the Highest Earners

The new legislation also places a 35% cap on the tax benefits of itemized charitable deductions for those in the top 37% tax bracket, beginning in 2026.

To illustrate, consider a filer with $1 million in AGI who donates $20,000 to charity. Because of the new floor and cap, part of that donation—$5,000—wouldn’t be deductible, and the total tax savings would fall to about $5,250, compared with $7,400 under the old rules.

This change only affects itemized deductions; the $1,000/$2,000 deduction for non-itemizers remains separate. High-income donors who regularly make large charitable gifts may wish to accelerate those gifts into 2025 to maximize current tax benefits.

What Donors Should Consider

The 2025 tax changes offer both new opportunities and new challenges for charitable givers. To make the most of these updates:

●     Review your timing: Consider making or “bunching” contributions before year-end 2025, while current deduction rules remain in effect.

●     Plan ahead for 2026: If you don’t itemize, you may be able to benefit from the new above-the-line deduction starting next year.

●     Think beyond cash: Non-cash gifts such as appreciated securities or assets can help reduce capital gains while supporting charitable causes.

●     Work with professionals: A trusted financial or tax advisor can help ensure your giving strategy aligns with your overall financial goals and takes full advantage of available tax benefits.

The Bottom Line

The 2025 tax law reshapes the charitable giving landscape. While non-itemizers will soon have new incentives to give, higher-income donors may find that deductions become less valuable in future years. With thoughtful planning, this year could present a unique opportunity to give generously—and make it count for both the causes you care about and your own financial picture.

Sources:

https://www.fidelity.com/learning-center/personal-finance/charitable-giving-tax-changes

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.