How does the OBBBA impact charitable giving?
The One Big Beautiful Bill Act (OBBBA), a new federal tax law effective July 4, 2025, makes several prior tax cuts permanent and introduces new rules for charitable giving—changes that could directly influence how your gifts to Boston College affect your taxes, offering both new opportunities and important adjustments.
Key Provisions Related to Charitable Giving
- Tax rates of 10%, 12%, 22%, 24%, 35%, and 37% are permanently extended.
- The standard deduction is permanently extended at the higher level.
- For 2025: $15,750 for single filers; $31,500 for married couples filing jointly.
- Temporary increase for seniors: From 2025 to 2028, individuals aged 65+ may add $6,000 to their standard deduction, with phase-outs beginning at $75,000 adjusted gross income (AGI) ($150,000 for joint filers).
- Limited deduction for non-itemizers begins in 2026.
- Those taking the standard deduction may deduct an additional $1,000 ($2,000 for joint filers) for charitable gifts.
- Note: Gifts to donor advised funds (DAF) are excluded.
- There will be a new threshold for itemizers in 2026: charitable contributions are deductible only to the extent they exceed 0.5% of adjusted gross income (AGI).
- The 60% of AGI limit for cash gifts to public charities is permanently extended.
- Top-bracket donors (37%) may only deduct charitable gifts at 35% starting in 2026.
- Estate and gift tax exemption increases to $15 million per individual ($30 million per married couple).
Yes. 2025 is a strategic year to maximize your charitable impact, as certain tax benefits are more favorable in 2025 than they will be in 2026. Consider maximizing deductions now.
- Itemized deductions will be worth less next year.
- Deductions below 0.5% of AGI will be disallowed in 2026.
- Example: If your AGI is $100,000, the first $500 of giving won’t count towards your tax deduction.
- If you're in the 37% bracket, deductions will count at 35%, not 37%, in 2026.
- Example: If you’re in the 37% tax bracket and you make a $10,000 gift in 2026, your deduction will reduce your tax bill by $3,500, not $3,700—because deductions will be valued at 35%, not your full marginal rate.
- None of these limitations apply in 2025.
- Deductions below 0.5% of AGI will be disallowed in 2026.
Yes, you may concentrate, or “bunch,” multiple years of giving into one high-impact year.
- Make a larger gift in 2025 to exceed the standard deduction and itemize.
- In future years, return to the standard deduction.
- You can also bunch by prepaying a multiyear pledge or accelerating your giving timeline.
Example: If you typically give $10,000 to your favorite charitable organization each year, you might choose to “bunch” two years’ worth of giving—$20,000—into 2025. Why? Because in 2025, you can still deduct the full amount at your current tax rate, before the new limits and floors take effect in 2026.
Even if you don’t itemize, donating appreciated assets (like stocks or real estate) offers these key benefits:
- Avoid capital gains tax.
- Keep reported income lower, potentially qualifying for the senior bonus deduction if you are age-eligible.
- If you do itemize, you still receive the full charitable deduction.
Yes. If you’re age 70½ or older, consider a Qualified Charitable Distribution (QCD), which allows you to make a direct gift from your IRA to Boston College.
- The gift is excluded from taxable income.
- Lower AGI may reduce Medicare premiums and other tax liabilities.
While tax incentives may help you make smarter decisions regarding your philanthropy, your support for Boston College is ultimately about the impact of your giving. Your generosity fuels student success, academic excellence, and transformative programs, ensuring the University continues to lead and grow, regardless of changes in tax law.
We’re here to help. BC’s Office of Gift Planning can guide you through the process, answer questions, and work with your advisors to structure a gift that meets your goals. Contact us at 877-304-SHAW or giftplanning@bc.edu.