Many families want their wealth to do more than provide financial security. They want it to create a positive impact in the world. Charitable giving is one of the most powerful ways to achieve that goal. With recent legislation, like the One Big Beautiful Bill Act (OBBBA), the rules for giving have changed. Some changes make generosity more accessible, while others add new complexities.
When OBBBA is combined with other tools such as state and local tax strategies, trusts, and private foundations, it can still help families support meaningful causes, manage taxes, and build a lasting legacy. The key is understanding both the opportunities and the challenges.
The Pros and Cons of OBBBA for Charitable Giving
Bigger Deductions with Limits
OBBBA makes permanent the ability to deduct cash gifts to qualifying public charities up to 60 percent of adjusted gross income for itemizers. Beginning in 2026, a 0.5 percent floor applies so only the portion of annual gifts above that threshold is deductible, and a new limitation effectively caps the value of itemized deductions at 35 percent for taxpayers in the highest bracket. Timing and amounts matter more than before.
More Flexibility in What You Can Give
Donating appreciated assets such as publicly traded stock or real estate remains a powerful way to avoid capital gains on the gifted assets and to claim a charitable deduction, subject to percentage limits and qualifying organization rules. The new above-the-line deduction for non-itemizers beginning in 2026 is capped at 1,000 dollars for single filers and 2,000 dollars for married filing jointly and it does not apply to donor-advised funds or private non-operating foundations.
Simplification and New Complexity
OBBBA settles some questions by extending or codifying key rules, yet it adds new thresholds, floors, and formula limits that can reduce benefits for higher earners. The reintroduced Pease-like limitation beginning in 2026 reduces itemized deductions using a 2 over 37 formula tied to the top bracket threshold, which increases the importance of modeling and carryforward strategy.
In short: OBBBA opens the door to larger and more strategic gifts, but the fine print means donors should plan carefully to capture the full benefit.
Working Around the SALT Deduction Cap
The federal deduction for state and local taxes was capped at 10,000 dollars under prior law. OBBBA temporarily increases the cap to 40,000 dollars starting in 2025 and includes income-based phaseouts and small annual increases through 2029, after which current law would revert. Coordinating charitable strategies with state and local tax planning can help manage overall liability during this window.
Using Trusts for Giving and Legacy
Trusts remain a powerful way to combine philanthropy with long-term family planning.
1. Charitable Remainder Trusts (CRTs): Provide income for life or a term of years, with remaining assets going to charity.
2. Charitable Lead Trusts (CLTs): Provide a stream of payments to charity for a set period, then distribute the remainder to heirs, often with transfer tax benefits when structured properly.
3. Grantor variants: Certain grantor structures can allow a current-year income tax deduction while letting you shape how gifts are used.
Pairing these structures with OBBBA’s new thresholds can enhance tax efficiency and help giving continue across generations.
Private Foundations for Control and Family Involvement
For families seeking control, private foundations remain a flexible option. They allow you to set mission and strategy, involve children and grandchildren in governance, and support a wide array of charitable projects, subject to specialized compliance rules and excise taxes.
Bringing It All Together
A successful giving strategy blends multiple tools:
1. OBBBA for enhanced deductions and expanded options with careful attention to floors and limits.
2. SALT planning to manage taxes in higher-tax states during the temporary cap increase period.
3. Trusts to create flexibility and long-term impact.
4. Private foundations to build a family legacy with governance and control.
Together, these approaches make philanthropy not only generous but also strategic.
Final Thoughts
Philanthropy should feel rewarding both emotionally and financially. The One Big Beautiful Bill Act changes the charitable landscape. It creates new opportunities to give more, but it also introduces limits that require careful navigation. By combining OBBBA with trusts, SALT strategies, and foundations, you can reduce taxes while building a legacy of generosity that lasts for generations.