Matt Wasserman
The bottom line: donors who wait until 2026 will lose significant tax leverage.
For decades, tax policy has shaped donor behavior, often spurring generosity at year-end when individuals consider both their philanthropic goals and tax liabilities. Now the One Big Beautiful Bill Act (OBBBA) has reshaped charitable giving rules in the United States. For this year only, donors can still give under the “old rules,” which allow deductions without new floors or caps. Starting January 1, 2026, new limits take effect: donors must give more before their gifts qualify for deductions, and the value of deductions will be capped for wealthier donors.
For fundraising, this makes 2025 the most important year-end giving season in a decade. Donors, especially high-income families and those with appreciated assets like stock, real estate, or business interest, have a narrow window to make tax-smart gifts before the landscape shifts. You don’t need to be a tax attorney, but you should understand the basics of what’s on the table this year. Here are the highlights…
Why 2025 Matters for Charitable Giving
For decades, charitable tax rules have influenced how and when donors give. OBBBA keeps in place familiar limits for 2025:
- Cash gifts to public charities can be deducted up to 60% of adjusted gross income (AGI).
- Gifts of appreciated assets to nonprofits (stock, real estate, business shares held more than a year) can be deducted at fair market value, up to 30% of AGI.
These rules stay in effect through December 31, 2025. But starting in 2026, giving gets more complicated and less favorable. That makes 2025 a year of urgency and opportunity.
Beginning January 1, 2026:
- A new giving floor: Only donations above 0.5% of AGI will count toward a deduction. For example, a household with $500,000 of AGI would see the first $2,500 of giving provide no tax benefit.
- A cap on deduction value: The tax benefit of charitable deductions will be capped at 35%, even for those in higher brackets. This reduces the value of gifts for wealthier donors.
- A new break for non-itemizers: Households that don’t itemize can deduct up to $1,000 (single) or $2,000 (married) for cash gifts. However, this does not apply to gifts to donor-advised funds or most private foundations.
- Corporate giving changes: A new 1% taxable-income floor applies to C-corporation charitable deductions (on top of the existing 10% ceiling).
The 60% (cash) and 30% (appreciated assets) limits don’t change in 2026, but more giving won’t count (due to the floor), and the tax value of deductions will be reduced (due to the 35% cap).
The bottom line: donors who wait until 2026 will lose significant tax leverage.
Who Will Feel the Impact Most
Some donor groups are especially motivated to act before 2026:
- High-income households: Those in the top tax brackets lose the most from the new 35% cap.
- Investors with appreciated assets: Donating stock or real estate now avoids capital gains taxes and locks in today’s stronger deduction value.
- Steady annual donors: People who give modest amounts each year may find their deductions wiped out by the 0.5% floor unless they “bunch” multiple years of giving into 2025.
- Business owners: Under existing rules, those considering a sale or transfer may benefit by donating shares before a deal closes—especially in 2025, when the floor and cap haven’t yet taken effect. These gifts can be complex and should be reviewed with legal and valuation advisors.
Strategies to Use in 2025 Donor Conversations
To help donors act now, frame conversations around timing and impact, not tax jargon.
- Lead with urgency, not fear
- “2025 is the last year before new limits reduce the value of charitable deductions. Many donors are choosing to accelerate their giving plans this year.”
- Highlight appreciated asset gifts
- “By giving stock or property you’ve held for more than a year, you can avoid capital gains tax and receive a deduction for the full value of the asset.”
- Suggest bunching
- “With a new giving floor starting in 2026, some donors are combining several years of giving into 2025 or making a donor-advised fund contribution now.”
- Encourage early action
- Remind donors that complex gifts like real estate or private business interests require weeks or months to complete.
Always remind donors to consult their own tax advisors; your team should not provide individualized tax advice.
Sample Messaging You Can Adapt
- For major donors:
“This is the final year before new limits reduce the value of charitable deductions. Acting now can preserve more of your giving power.” - For stockholders:
“Did you know you can give appreciated stock directly, avoid capital gains tax, and deduct the full value? This strategy is especially valuable in 2025.” - For steady annual donors:
“Because of new rules starting in 2026, some donors are moving two or three years’ worth of giving into 2025 to make sure every dollar counts.”
Gifts of Appreciated Assets: What to Know
For many donors, giving appreciated assets is the single most tax-efficient way to give.
Key points to share with donors:
- If the asset has been held for more than a year, they can usually deduct the fair market value.
- They avoid paying capital gains tax on the appreciation.
- Stock gifts can often be completed in a few days, but real estate or private business gifts may take weeks or months.
Make the process clear and easy, while reminding donors to talk with their financial advisors.
Conversation Starters for Major Donors
- “Have you considered how the 2026 tax changes might affect your giving plans?”
- “Would you like to see how a gift in 2025 compares with one made in 2026 under the new rules?”
- “Do you hold appreciated stock or property that could be donated this year for maximum benefit?”
Call to Action for the remainder of 2025
2025 is not a routine year-end; it is the last year before new federal rules reduce the value of many charitable deductions. Your job is to help donors act now by:
- Educating them clearly on what’s changing.
- Making asset gifts simple and timely.
- Encouraging them to consult with their tax advisors.
By doing so, you’ll position your nonprofit as a trusted partner during a pivotal tax transition and unlock generosity before the window closes.
Above all, remind donors: consult with your financial advisor to determine the best strategy, but don’t miss the chance to act before December 31, 2025.
Note: This article is for educational purposes only and is not tax or legal advice. Encourage every donor to consult their own advisors.
