The New “Big Beautiful” Tax Law, featured in the August issue of the SMI newsletter, offers a handy overview of the new tax law's key provisions, such as increasing the standard deduction for 2025 and establishing a temporary "bonus" deduction for taxpayers aged 65 or older.
Of course, every change in tax law has both direct and indirect consequences. An analysis from the National Christian Foundation (NCF) notes that increasing the standard deduction likely will further reduce the number of taxpayers who itemize. Currently, only about 10% of taxpayers itemize. That's down sharply from the roughly 30% who itemized before the passage of the 2017 Tax Cuts and Jobs Act.
For most givers, not being able to itemize has little effect on their charitable giving. They are compelled to give for reasons outside the tax code.
However, because non-itemizers have no "tax incentive" for giving — and some members of Congress apparently think they should — the One Big Beautiful Bill Act is bringing back a charitable deduction (which was available in tax years 2020 and 2021) for those who don't itemize.
From NCF:
Beginning in 2026, the OBBBA reintroduces an additional charitable deduction for nonitemizers (an above-the-line deduction). This permanent deduction allows givers who don't itemize to deduct up to $1,000 ($2,000 for joint filers) from their taxable income for cash gifts made to churches and public charities (but not to Giving Funds or supporting organizations). This is in addition to the standard deduction.
Note that the giving-related deduction for non-itemizers will apply to cash gifts only, not to other types of charitable donations.
For taxpayers who do itemize, the One Bill Big Beautiful Bill Act introduces a twist — a charitable deduction "floor" that makes giving less appealing from a tax perspective and makes planning one's giving strategically more critical.
[The floor] means individuals can only deduct charitable gifts that exceed 0.5% of their adjusted gross income (AGI).... Since annual giving limits weren't increased, this effectively reduces the annual amount that can be deducted....
[So, starting] next year, work with your advisors to determine whether you should bunch your income (if possible) and your giving, making your larger gifts in years you have lower AGI to limit the effect of the floor.
Be a tax-wise giver
"God loves a cheerful giver" (2 Corinthians 9:7), regardless of what the tax code says. But you can be a cheerful giver and a wise one, too.
To learn more about giving efficiently under the new rules, check out the NCF's article, "New Tax Rules Make Charitable Bunching and [Donor-Advised Funds] More Rewarding Than Ever." It's well worth reading even if you're currently a non-itemizer.
Overall, the National Christian Foundation states that the One Bill Big Beautiful Bill Act brings welcomed stability to the tax landscape after years of uncertainty caused by the "sunset" feature of the 2017 tax law. "This stability in tax rules provides more predictability, which should help with charitable planning."
