Tax Law Changes and Impact on Charitable Giving

How Trump’s New Law Affects Charitable Giving

On July 4, 2025, a big new law backed by former President Trump was signed. It’s called the ‘One Big Beautiful Bill’—and yes, that’s really the name. It covers everything from taxes and spending to military and energy. But if you donate to charity—or run a nonprofit—there are a few key changes you should know about. Let’s break it down in simple terms.

1. You Can Get a Tax Break Even If You Don’t Itemize

Let’s say you don’t usually itemize your taxes (most people don’t—you just take the standard deduction). Now, you can still get a small bonus if you give to charity. Starting in 2026, you can write off up to $1,000 if you’re single, or $2,000 if you’re married—just for giving to a registered charity.

Example: If you and your spouse donate $200/month to your church or local food bank, that’s $2,400 a year. You can now deduct $2,000 of that, even without itemizing.

2. Wealthier People Get a Bit Less Back from Donations

If you do itemize—especially if you earn a high income—your donation deductions won’t go as far. You can only count donations that go above 0.5% of your income. And the tax break is a little smaller than before.

Example: If you make $500,000 a year, only donations over $2,500 will count. And the value of the write-off is worth about $0.35 per dollar now instead of $0.37.

3. Businesses Have to Donate More to Get the Write-Off

Companies now have to give at least 1% of their income to charity before they can claim any deduction.

Example: If a business earns $1 million, it has to donate at least $10,000 to write anything off. This could mean fewer small or ‘token’ donations from big companies.

4. Nonprofits and Foundations: Some Wins, Some Losses

Big foundations were worried about new taxes, but the bill didn’t hit them too hard.
However, nonprofits will now have to pay a special tax on any staff member making more than $1 million a year.

Example: If a university president makes $1.5 million, the nonprofit might owe extra tax just on that salary.

5. You Can Get a Tax Credit for Helping Kids in School

There’s a new tax credit (not just a deduction) if you give money to approved groups that fund scholarships for K–12 students.

Example: If you donate $1,700 to a scholarship fund for low-income kids, you can subtract that full amount from your tax bill—up to the limit.

What Does This Mean For You?

· If you’re an everyday donor: You get a new tax break even if you don’t itemize.

· If you’re wealthy: Your deductions are limited and worth a bit less.

· If you run a business: You need to give more to get tax benefits.

· If you work at a nonprofit: Prepare for changes in donor behavior—and watch those executive salaries.

Smart Tips Going Forward

· Give consistently: Even small monthly donations can add up to tax savings.

· If you’re wealthy, talk to a tax advisor about ‘bunching’ donations or planning large gifts.

· If you run a nonprofit, work on growing your base of small donors and explaining the new tax benefits to them.