On July 4, 2025, the One Big Beautiful Bill Act (OBBB) was signed into law, introducing new provisions that may shape charitable giving in meaningful ways. Several provisions of the legislation may affect your end-of-year giving, making it essential to evaluate how these changes may influence your current charitable planning strategies. OBBB introduces three new tax provisions that could significantly influence your decisions on charitable giving strategies, offering both expanded opportunities and important considerations for our donors:

1. Above-the-line charitable deductions for non-itemizers
   Beginning in the 2026 tax year, a reinstated deduction allows non-itemizers to deduct cash donations to charity—up to $1,000 for single filers or $2,000 for married couples filing jointly. Implication:  More than 89% of households do not have itemized deductions, making them ineligible for charitable giving tax deductions. This encourages more support for charities like Rancho Coastal Humane Society – making your gift even more valuable!!

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   New limits to deductions for itemizers in the top tax bracket
   The new legislation caps the tax benefits of itemized charitable deductions at 35%, even for those in the 37% marginal tax bracket. In other words, these high-income filers donating $1,000 would receive a $350 deduction instead of the current $370. This change goes into effect in the 2026 tax year. Implication:  Donors in higher tax brackets who are considering a significant philanthropic gift may want to think about accelerating their gift to 2025 to maximize their deduction under the current marginal rate before the new cap goes into effect.

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3. New floor on deductions for itemizers and corporations
   Effective in the 2026 tax year, itemizers who make charitable contributions will only be able to claim a tax deduction to the extent that their qualified contributions exceed 0.5% of their adjusted gross income (AGI). For example, a couple with an AGI of $300,000 could only deduct charitable donations in excess of $1,500. Similarly, corporations will only be entitled to deduct charitable contributions to qualified charities that exceed 1% of their taxable income. Implication: High-income individuals who itemize deductions should carefully consider the timing and amounts of their giving, and the strategies to maximize their deduction. For example, a bunching strategy or an approach of making larger gifts with less frequency can be more effective under the new rules. Corporations may want to take steps to proactively manage (and potentially increase) their giving to ensure they exceed the 1% threshold.

It’s time to think about how and when you should give to Rancho Coastal Humane Society.  Every gift matters! With your support, RCHS has been able to expand its programs and services; now, you have an opportunity to help yourself to a little tax relief while you save lives of abandoned companion animals and offer a helping hand to pet families in crisis.     

Consult your advisor

This summary is for informational purposes only and should not be considered tax or legal advice. Please consult your tax professional for guidance specific to your situation.

We hope this helps!