New Tax Law, New Giving Strategies: What Nonprofits Need to Know About Individual Donor Giving

Will donors give more—or less—because of the “One Big Beautiful Bill”? 

HOW WILL TAX POLICY CHANGES IMPACT INDIVIDUAL PHILANTHROPY (AND YOUR NONPROFIT’S BOTTOME LINE)?  

On July 4, 2025, the One Big Beautiful Bill Act (OBBB, H.R.1) was signed into law, extending key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and introducing new tax rules that have implications for the national philanthropic landscape. 

At Latz & Company, we are committed to equipping nonprofits, donors and advisors with the tools and knowledge needed to navigate these changes.  

Many provisions of the law take effect in 2026 which means the potential impact should be considered for fundraising planning into the coming year. At the same time, some of our clients anticipate shifts in corporate and individual giving as soon as this holiday season, as savvy donors seek ways to optimize their giving before the new laws take effect.   

We believe in trust-based philanthropy, sustained impact, and donor flexibility—values that remain essential as giving evolves under the new rules. So we’ve taken some time to review the law on behalf of our clients and wanted to share our perspective.   

Below is a comprehensive summary of the changes as it impacts your individual donors, along with insights into how your organization can help donors navigate and adapt to the new environment. Look out for our forthcoming review of changes to corporate giving.

KEY CHANGES IN THE ONE BIG BEAUTIFUL BILL ACT 

  • Extends and modifies several provisions of the 2017 Tax Cuts and Jobs Act.  

  • Introduces new deduction thresholds for individuals and corporations. 

  • Reinstates and expands a universal charitable deduction for non-itemizers. 

  • mplements deduction caps for high-income itemizers. 

  • Adds a new credit for K–12 scholarship donations. 

  • Adjusts estate and gift tax exemptions, affecting long-term giving strategies.  

FOR INDIVIDUAL DONORS (EFFECTIVE 2026 AND BEYOND) 

1) New 0.5% Adjusted Gross Income Floor for Deductible Contributions 

  • Itemizing donors can deduct charitable gifts only to the extent that their annual giving exceeds 0.5% of their Adjusted Gross Income (AGI). 
    Example: A donor with $200,000 AGI must give over $1,000 before deductions apply. 

 

2) 35% Cap on Deduction Value for High-Income Donors 

  • For those in the top marginal tax bracket (37%), the value of itemized deductions—including charitable gifts—is capped at 35%. 
    Implication: High earners will receive a slightly lower tax benefit for the same gift amount starting in 2026. 

 

3) Universal Charitable Deduction for Non-Itemizers 

  • Beginning in 2026, all taxpayers can claim a deduction for cash donations: 

    • Up to $1,000 for individuals 

    • Up to $2,000 for married couples filing jointly 

  • Gifts to donor-advised funds (DAFs), private foundations, or supporting organizations are not eligible. 

4) New Tax Credit for K–12 School Scholarships (Starting 2027

  • Donors can receive a non-refundable tax credit of up to $1,700 per individual (or the amount donated, whichever is lower) for contributions to qualified scholarship-granting organizations. 

 

5) Permanent Extension of 60% AGI Limit for Cash Contributions 

  • Donors can continue to deduct cash donations to public charities up to 60% of AGI—this provision is now permanent. 

 

6) Estate and Gift Tax Exemption Increase (Effective 2026) 

  • The federal estate and gift tax exemption increases to $15 million per individual (indexed for inflation), reducing estate tax exposure for most donors and allowing greater flexibility in lifetime giving strategies. 

 

POTENTIAL ADJUSTMENTS INDIVIDUAL DONORS MAY MAKE  

  1. Accelerate Giving in 2025. Donors in the highest tax brackets may benefit by making major gifts before the 2026 deduction cap and AGI floor are implemented. 

  2. Use Bunching Strategies. Consolidating multiple years of planned giving into one year (especially in 2025) can help exceed the new 0.5% AGI floor and maximize deductions. 

  3. Leverage Non-Cash Assets. Gifts of appreciated assets (like stocks or real estate) continue to offer capital gains tax advantages and may be more beneficial than cash gifts under the new rules. 

  4. Coordinate with Estate Planning. Lifetime gifts made before death can reduce taxable estate size while preserving philanthropic intent and flexibility. 

  5. Use Donor Advised Funds (DAF) Strategically. Though DAF contributions don’t qualify for the universal deduction, they remain a powerful tool for timing, flexibility, and legacy planning—especially when paired with estate planning. 

 

YOUR IMPACT: WHAT DOES THIS MEAN FOR YOU?

KEY STRATEGY AND TACTICS FOR NON-PROFITS 

  1. Make a shortlist of donors and partners who may be most likely to shift their philanthropy under this context.  

  2. Prioritize one-on-one outreach to these leading stakeholders, letting them know you’re aware of the changes, and you hope to continue to count on their support. Request check-in meetings where needed.  

  3. Encourage / support conversations your donors may be having with their tax and financial advisors and let them know you have options available to maximize giving.  

  4. Brainstorm ways to bundle, reflect, or allocate commitments that can help your donors get the most benefit.  

  5. Consider the macro perspective as important context. Recent reporting from Giving USA validates the resilience (and growth) of American philanthropy overall. Perhaps the question is less whether donors will still give, but how will your donors give in the future.  

 

This new Bill provides opportunities as well as considerations for future fundraising. For non-itemizer individual donors, the new deduction may broaden your donor base. You might see a surge in 2025 giving from your high net-worth donors and estate planning may increase lifetime giving and legacy gifts. 

Latz & Co will continue monitoring policy developments, providing guidance, and advocating for a thriving philanthropic ecosystem. 

Please feel free to reach out to the Latz team to discuss your year-end messaging or your 2026 strategy as it relates to these new tax implications. We are here to support your fundraising needs.  

Disclaimer: Latz & Co. are not tax professionals, and the information provided is for general educational purposes only. It should not be considered as tax, legal, or financial advice. Please consult your own qualified tax professional or advisor for guidance tailored to your individual circumstances.