How does the OBBBA impact charitable giving?
The One Big Beautiful Bill Act (OBBBA), a federal statute passed into law on July 4, 2025, makes several prior tax cuts permanent and introduces new rules for charitable giving. These changes, taking effect in 2026, could directly influence how your gifts to Boston College affect your taxes, offering both new opportunities and important adjustments. We want to ensure you are informed so you can make the wisest decisions regarding your generosity.
Key Provisions Related to Charitable Giving
- Tax Rates: The current brackets—10%, 12%, 22%, 24%, 35%, and 37%—are permanently extended.
- Standard Deduction: The standard deduction is permanently extended at the higher level. For 2025, it is $15,750 for single filers and $31,500 for joint filers.
- Senior Boost (2025–2028): Individuals aged 65+ may add $6,000 to their standard deduction. Phase-outs begin at $75,000 adjusted gross income (AGI) ($150,000 for joint filers).
- Non-Itemizer Charitable Deduction (starting 2026): Taxpayers taking the standard deduction may claim an additional $1,000 ($2,000 for joint filers) for charitable gifts. Gifts to donor advised funds (DAFs) are excluded.
- Itemizer Threshold (starting 2026): Charitable contributions are deductible only to the extent they exceed 0.5% of AGI.
- AGI Limit for Cash Gifts: The 60% of AGI limit for cash gifts to public charities is permanently extended.
- Top-Bracket Limitation (starting 2026): Donors in the 37% bracket may only deduct charitable gifts at a 35% rate.
- Estate & Gift Tax Exemption: These exemptions increase to $15 million per individual ($30 million per married couple).
What does this mean for you?
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.
- Deductions below 0.5% of AGI will be disallowed in 2026.
None of these limitations apply in 2025.
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.