Photo Credit: Gemini
With the passage of the new tax law, One Big Beautiful Bill Act (OBBBA), sweeping tax changes are set to take effect in 2026, changes that will significantly impact how individuals and corporations approach philanthropy. While the new law aims to simplify the tax code, it also introduces new thresholds and limitations that could reduce the financial incentives for charitable giving.
That’s why 2025 presents a unique and strategic opportunity for donors to maximize their impact, especially through donor advised funds (DAFs).
What’s Changing Under the New Tax Law?
Starting in 2026, several provisions will reshape the landscape of charitable giving:
- Tax Rates: The tax rates introduced in the 2017 Tax Cuts and Jobs Act (TCJA) are now permanent and indexed to inflation beginning in 2026.
- Standard Deduction: The standard deduction has increased and will be $16,100 for single, $32,200 for married filing jointly, and $24,150 for heads of households.
- Non-Itemizer Charitable Contribution Deduction: For those taking the standard deduction, a charitable contribution deduction has been created. Beginning in 2026 $1000 for single filers and $2000 for joint. The contribution cannot be made to a DAF.
- SALT Deduction Cap Increase: The cap rises from $10,000 to $40,000, benefiting many high-income earners in states like NY, NJ, and CA (though it phases down for those with AGIs over $500,000.)
- Charitable Deduction Limitations: Beginning in 2026 a floor of 0.5 percent of AGI is imposed before a charitable deduction can be taken, additionally for those in the highest tax bracket the value of all deductions is capped at 35% of AGI.
- Permanent 60% AGI Limit for Cash Gifts: This favorable rule remains in place, allowing donors to deduct cash gifts to public charities and DAFs up to 60% of AGI.
- Corporate Giving Threshold: C corporations must now give more than 1% of income before deductions apply.
- Exemption Amount: These changes don’t eliminate the benefits of charitable giving, but they do make 2025 a pivotal year for planning ahead.
Why 2025 Is a Strategic Year for Giving
Because many of the new tax law’s provisions won’t take effect until 2026, 2025 is the last full year to give under the current, more favorable rules. This creates a window of opportunity for donors to:
- Open or Contribute to a Donor Advised Fund: Fund a DAF in 2025, take the full deduction now, and recommend grants over time, even if future deductions become less generous.
- Bunch Contributions: Consolidate multiple years of giving into 2025 to exceed the itemized deduction threshold and receive a larger tax benefit.
- Donate Appreciated Securities: Avoid capital gains tax and receive a full fair-market-value deduction (subject to a 30% AGI limit).
- Review Estate Planning: Use charitable gifts to manage taxable estates, especially with federal and state exemptions in flux.
As Lee Cohen, CPA and CEO of LMC noted during a recent JCF webinar, “2025 is a pivotal year for philanthropic planning. The changes coming in 2026 will make it more important than ever to be strategic about how and when you give.”
How Donor Advised Funds Help You Stay Ahead
A donor advised fund at Jewish Communal Fund offers donors:
- A full tax deduction in the year of contribution
- The flexibility to recommend grants at any time
- Access to tax-smart giving strategies, including donating appreciated stock
For example, a donor who typically gives $25,000 annually could contribute $75,000 to a DAF in 2025, receive the full deduction under current rules, and then make grants over the next several years. This approach preserves tax benefits while ensuring consistent support for the causes that matter most.
“Opening or contributing to a donor advised fund now allows you to set aside funds for giving while tax rules are more favorable,” said Rachel Schnoll, CEO of Jewish Communal Fund. “Even if tax incentives change, you’ll be able to continue supporting the organizations you care about because you’ve already made the commitment.”
Planning for the New Tax Law Without Panic
While 2025 is an optimal year for giving, it’s important not to interpret the new tax law as a reason to stop giving in 2026 and beyond. Philanthropy will remain a powerful tool for impact, and donor advised funds will continue to offer flexibility, efficiency, and long-term value.
The key is to plan ahead and work with your financial and tax advisors to determine the best strategy for your unique situation.
Next Steps for Fundholders and Advisors
- Talk to your tax advisor about how the new tax law and charitable giving intersect with your 2025 plans.
- Identify appreciated assets that could be donated for maximum tax efficiency.
- Consider front-loading your DAF to lock in current tax benefits while maintaining future giving flexibility.
- For business owners, evaluate whether giving should be made personally or through your entity, especially with new corporate giving floors.
At JCF, we’re here to help you navigate these changes and ensure your giving remains impactful, efficient, and aligned with your values.