This summer’s passage of the One Big Beautiful Bill Act (OBBBA) brings several tax changes that may impact year-end planning. As you consider your charitable giving for the remainder of 2025, keep in mind that the tax landscape will shift in 2026 and beyond, creating potential advantages to acting this year.
Below are a few key provisions of the OBBBA and related considerations for year-end giving.
Key OBBBA Provisions
- Tax rates made permanent: OBBBA makes permanent the current tax brackets of 10% to 37%, the higher standard deduction, and the elimination of personal and dependent exemptions. Seniors aged 65+ may qualify for a new deduction beginning in 2025.
- State and Local Tax (SALT) deduction increased: For 2025, the SALT deduction cap temporarily rises to $40,000 for married couples with incomes below $500,000, potentially enabling more taxpayers to itemize.
- New limits on charitable deductions (starting 2026):
- Only the portion of charitable gifts above 0.5% of AGI will be deductible for those who itemize.
- Itemized deductions—including charitable gifts—will be capped at 35% for those in the top 37% bracket.
- If you are planning a significant gift in 2026 or later, consider accelerating it into 2025.
- New charitable deduction for non-itemizers (starting 2026): Standard-deduction filers will be able to claim up to $2,000 (married filing jointly) for cash gifts to public charities (not including Donor Advised Funds (DAFs).
Year-End Giving Strategies to Consider
- Donate appreciated assets: Gifting long-term appreciated stock or other assets can provide a full-value deduction and avoid capital gains tax. This remains one of the most tax-efficient charitable giving strategies.
- Establish or add to a DAF: Useful for bunching contributions before the new limits take effect in 2026. Appreciated assets can be especially advantageous. If you don’t have a DAF, consider opening one—it’s easy to set up.
- “Bunch” charitable gifts: If your 2025 deductions won’t exceed the standard deduction, consider grouping multiple years of giving into 2025 to maximize tax benefits—particularly before the new 2026 limitations.
- Use Qualified Charitable Distributions (QCDs): Individuals aged 70½ or older can give up to $108,000 per person directly from IRAs to charity tax-free. QCDs can also count toward required minimum distributions. A one-time IRA rollover of up to $53,000 to fund a charitable gift annuity is now permitted.
- Annual gifting to family: The annual gift tax exclusion for 2025 is $19,000 per recipient.
Your Jewish Federation professionals would be happy to discuss charitable giving opportunities with you and your advisors. Please note that the Jewish Federation does not provide tax advice.
You can contact us at 248-203-1519 or brown@jewishdetroit.org for further information.
As always, thank you for your generous support of the Jewish Federation. Your commitment continues to make a difference for our Jewish community—in Detroit, in Israel and around the world.