If you regularly donate to causes you care about \u2014 like bringing water to people in sub-Saharan Africa \u2014 you may wonder what this change means for you. We\u2019ve worked to translate all of the new information to keep you informed and help you make decisions both for the 2025 and 2026 tax years.<\/p>\n\n\n\n
Please note: We are not tax advisors, and this information is meant for general understanding and awareness, not financial advice.\u00a0<\/em><\/p>\n\n\n\n When the TCJA took effect in 2018, the legislature \u201cnearly doubled<\/a>\u201d our standard deduction<\/a> (the amount of money most people can subtract from their income before being taxed). This increased standard deduction made filing taxes simpler, but it also meant fewer people could itemize<\/a> their deductions, like mortgage interest \u2014 or charitable gifts.<\/p>\n\n\n\n For most people, the TCJA made the standard deduction much larger than the total of their itemized deductions. Since everyone wants to pay tax on the lowest amount possible, people naturally chose the bigger standard deduction.<\/p>\n\n\n\n This meant that, for many years, only people who gave large amounts or deducted other big expenses could see a tax benefit from their charitable giving<\/a>.<\/p>\n\n\n\n For seniors aged 65 and older, parts of the One Big Beautiful Bill begin in the 2025<\/strong> tax year, and for everyone else, most changes will take effect in 2026<\/strong>.<\/p>\n\n\n\n If you\u2019re 65 or older, the bill adds a new \u201csenior deduction<\/a>\u201d for the next few years, which allows you to deduct up to $6,000 per person or $12,000 per couple on top of your regular standard deduction. This gives retirees on fixed incomes a little more breathing room; however, higher-income<\/a> seniors will see this deduction phase out as income rises.<\/p>\n\n\n\n When the OBBB begins for other donors next year, charitable giving will change for everyone.<\/p>\n\n\n\n Even if you don\u2019t itemize your deductible expenses, everyone who files a tax return in 2026 will be able to subtract<\/a> up to $1,000 (if you file alone) or $2,000 (if you file jointly) in cash gifts to charities from their taxable income each year. This means almost anyone who donates to a charity will experience some tax benefit.<\/p>\n\n\n\n 2026 will also introduce a small \u201cfloor\u201d for those who choose to itemize. So, if you do itemize your deductions, your giving will only count after<\/strong> it adds up to 0.5% of your income (specifically, your Adjusted Gross Income<\/a>, or AGI). For example, if you earn $100,000 in 2026, the first $500 you give (.5% of your $100,000 in earnings) won\u2019t count for a deduction, but anything above that will. <\/p>\n\n\n\n For people with higher incomes, the new bill is less generous. Even though itemizers can still deduct large cash gifts \u2014 up to 60% of their income \u2014 the tax savings will be slightly smaller. If you\u2019re in the highest tax bracket<\/a>, you\u2019ll now save about 35 cents in taxes for every dollar you donate, instead of about 37 cents under the current rules.\u00a0<\/p>\n\n\n\n This massive bill<\/a> could affect how much of your income is taxed in some other ways, which might influence how much you (or your company) feel able to give.<\/p>\n\n\n\n If you work in a job where you earn tips or extra pay for overtime, you may be able to deduct some of that income<\/a> before it\u2019s taxed. <\/p>\n\n\n\n For a few years<\/a>, people who buy new, U.S.-assembled vehicles may be able to deduct the interest they pay on their car loans (up to certain limits<\/a>). <\/p>\n\n\n\n The OBBB raises the cap<\/a> on the amount of state and local taxes you can deduct in 2025. If you live in a high-tax state, this could change whether you choose to itemize or take the standard deduction, and that choice directly affects whether your charitable gifts count for tax purposes (until the new charitable deductions impacts occur in 2026).<\/p>\n\n\n\n For businesses<\/a>, the new law adds a minimum giving threshold. Starting in 2026, only the portion of a company\u2019s charitable donations that exceeds 1% of its annual income can be deducted from taxes. For example, if a company earns $1 million in a year, its first $10,000 (1%) in charitable gifts won\u2019t be deductible, but anything beyond that amount will be.<\/p>\n\n\n\n If your company offers a gift-matching program, this rule could influence when or how those matches are made.<\/p>\n\n\n\n No matter your income, there are simple ways to make the most of your charitable giving now, during the upcoming holiday season, and after most of the OBBB changes take effect in 2026.<\/p>\n\n\n\n Starting in 2026, nearly everyone can deduct a little something from their taxable income. You will be able to deduct<\/a> up to $1,000 (for individuals) or $2,000 (for couples) in cash donations even if you take the standard deduction. This change invites more people \u2014 and nonprofit organizations \u2014 to benefit from charitable gifts in 2026.<\/p>\n\n\n\n If you plan to make a large gift, 2025 may be the best year to do it before the new 0.5% floor and benefit cap take effect.<\/p>\n\n\n\n You might consider \u201cbunching<\/a>,\u201d which means combining two years of giving into one to get over the 0.5% deduction threshold that starts in 2026.<\/p>\n\n\n\n Or give appreciated<\/a> assets. Donating stocks<\/a> or mutual funds<\/a> that have grown in value can avoid capital gains tax<\/a> and still count as a deductible gift.<\/p>\n\n\n\n If you\u2019re 65 or older, don\u2019t forget about the new senior deduction that begins this year. It lowers your taxable income before any charitable giving is even counted.<\/p>\n\n\n\n If you have a Traditional Individual Retirement Account<\/a> (IRA), Qualified Charitable Distributions (QCDs) let you donate directly from your Traditional IRA so the amount isn\u2019t counted as taxable income<\/a> \u2014 and because the OBBB introduces new rules (floors, caps, senior deduction), this strategy is now even more powerful<\/a>. QCDs reduce your taxable income before it even shows up on your return, so they\u2019re not affected by the new floors or deduction caps that apply to regular charitable gifts.<\/p>\n\n\n\n If you were thinking of making a large charitable gift in the next year or two, you might consider giving part of it via QCD from your IRA before the end of 2025, as the new rules in 2026 will make itemized giving a bit tougher.<\/p>\n\n\n\n The new bill lowers the top tax savings rate for charitable gifts in 2026, from 37\u00a2 to about 35\u00a2 per dollar. Consider making a larger gift before the end of 2025 to benefit from the current higher deduction rate.<\/p>\n\n\n\n At The Water Project, we know you give because you care, not just for the tax benefits. But when the rules change, we want our donors to stay informed so they can keep making the greatest impact possible.<\/p>\n\n\n\n Tax codes change, but the benefits of gaining access to clean water are still incredible for individuals, families, communities, counties, and countries in Africa. If you\u2019re thinking about making a difference before these new rules take effect, your gift today<\/a> can change people\u2019s lives for years to come.<\/p>\n","protected":false},"excerpt":{"rendered":" Big changes are coming for charitable giving. Here\u2019s what the new One Big Beautiful Bill means for your donations in 2025 and 2026.<\/p>\n","protected":false},"author":34448,"featured_media":247358,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[16],"tags":[],"class_list":["post-247354","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-other-news"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/posts\/247354","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/users\/34448"}],"replies":[{"embeddable":true,"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/comments?post=247354"}],"version-history":[{"count":3,"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/posts\/247354\/revisions"}],"predecessor-version":[{"id":247361,"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/posts\/247354\/revisions\/247361"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/media\/247358"}],"wp:attachment":[{"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/media?parent=247354"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/categories?post=247354"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thewaterproject.org\/community\/wp-json\/wp\/v2\/tags?post=247354"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}How did charitable gifts work before the \u201cBig Beautiful Bill\u201d?<\/h2>\n\n\n\n
How will taxing charitable donations work now?<\/h2>\n\n\n\n
![\"A](\"https:\/\/thewaterproject.org\/community\/wp-content\/uploads\/2025\/10\/big-beautiful-bill.png\")
<\/figure>\n\n\n\nHow else might the OBBB affect my charitable giving choices moving forward?<\/h2>\n\n\n\n
Deduction for tips and overtime pay (2025\u20132028):<\/h3>\n\n\n\n
Car-loan interest deduction:<\/h3>\n\n\n\n
Changes to the state and local tax (SALT) deduction:<\/h3>\n\n\n\n
Corporate giving floor:<\/h3>\n\n\n\n
What does all this mean for me?<\/h2>\n\n\n\n
For Everyone<\/h3>\n\n\n\n
For Donors Who Itemize<\/h3>\n\n\n\n
For Retirees <\/h3>\n\n\n\n
For Higher-Income Donors<\/h3>\n\n\n\n
Our Final Word<\/h2>\n\n\n\n