Big Changes Are Coming to Charitable Giving. How to Get Maximum Savings.

Republicans’ big tax and spending law made major changes to charitable giving. And now’s the time to plan for maximum savings.

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Passed on July 4, the One Big Beautiful Bill Act expanded charitable deductions for some taxpayers while curtailing them for others. The expansion takes the form of a new, above-the-line deduction of up to $1,000 for single filers and $2,000 for married filers who take the standard deduction. The limitations apply to those who itemize, and they reduce the value of charitable deductions.

While these provisions won’t take effect until January for the 2026 tax year, “this is the year to do some projections,” says Susan Hirshman, director of wealth management for Schwab Wealth Advisory in Phoenix. The key question: “How do I max out my tax efficiency over the years?”

Typically, taxpayers who claim the standard deduction don’t get a tax break on charitable gifts. The standard deduction is the amount that gets subtracted from your income before income taxes are calculated—it’s $15,000 for individuals and $30,000 for married couples in 2025. Taxpayers either claim the standard deduction or itemize expenses like property taxes, mortgage interest, and charitable donations, taking whichever amount is higher.

Starting next year, those who take the standard deduction can deduct charitable donations of up to $1,000 or $2,000, depending on their filing status. (Note: This applies to donations made directly to charities, not to donor advised funds.) “This kind of democratizes giving,” says Max Friedman, CEO and co-founder of Givebutter, a donation management platform for nonprofits.

If you typically take the standard deduction, you might consider delaying some of this year’s charitable gifts until January to take advantage of the new deduction, Hirshman says. 

Itemizers, meanwhile, might want to accelerate donations to avoid new restrictions. The law imposes a new threshold that donations must clear before they can be deducted: Only gifts that exceed 0.5% of a taxpayer’s adjusted gross income qualify. So, if your income is $200,000, you can only deduct donations above $1,000.

Another strategy is to accelerate income into this year, Hirshman says, before the new, 0.5% threshold takes effect. For example, if you were planning to do a Roth IRA conversion, it might make sense to do it in 2025. The process involves converting a traditional, pre-tax individual retirement account into a post-tax Roth IRA. The amount converted counts toward your income for the year and is subject to taxes, so it might make sense to take that hit before income becomes a bigger factor in charitable giving next year.

In addition to the 0.5% floor, the new law imposes a ceiling on deductions for those in the highest marginal tax bracket of 37%. Starting next year, they will receive a 35% deduction for charitable deductions instead of the full 37%.

Note to retirees: The new law didn’t touch qualified charitable distributions, which allow retirement account owners to satisfy their required minimum distributions by donating up to $108,000 in charitable distributions directly to a qualifying nonprofit.

The soaring stock market offers charitably minded investors a good opportunity this year. If you want to pare some positions in your taxable brokerage account, you can donate appreciated stock to a charity. This eliminates capital-gains tax and allows itemizers to take the full deduction before the new rules go into effect.

As with anything tax-related, there are a lot of moving parts when determining the right strategy. “You can’t do it in your head,” Hirshman says. “You have to do the math.”

Write to Elizabeth O’Brien at elizabeth.obrien@barrons.com