Policy Changes that could impact your gifting strategy

With the holidays approaching, now is a great time to think your options for charitable gifting. This year could look different: The One Big Beautiful Bill Act (OBBBA) that passed on July 4 has several changes that could impact your gifting strategies now and inform your approach in the coming years.

Below we highlight some of those changes that can inform your decisions and help you take advantage of deductions, potentially stretching your gift to the maximum benefit:

1. OBBBA permanently reinstates and increases charitable contribution deductions for non-itemizers
  • Deduct up to $1,000 for single filers or $2,000 for joint filers
  • Contributions must be in cash and for qualified 501(c)(3) public charities.
  • Contributions cannot be used to establish or maintain a Donor Advised Fund.
2. A .5% AGI floor is solidified for charitable contributions for itemizers
  • Beginning in 2026, itemizers can only deduct charitable contributions that exceed .5% of their adjusted gross income (AGI).  For example, if your AGI is $100k, you can only deduct the portion of your charitable contribution that exceeds $500 (.5% AGI).
  • The maximum amount you can deduct for charitable contributions is subject to preexisting AGI percent limits, which can vary depending on the type of donation (cash vs. property) or the type of organization (public or private) to which you donate.
  • If your charitable contribution exceeds the applicable AGI limit, you can carry the excess amount forward to deduct in future tax years including the new .5% floor.
3. 529 Plans recieve new eligible expenses
  • Coverage for K-12 educational resources is expanded to include tutoring outside the home, admission exams, and increased resources for students with disabilities.
  • OBBBA also establishes a new category of qualified expenses for some postsecondary credentialing programs (CFAs, etc.)
  • The limit increased to $20,000 per year beginning in 2026.
4. Tax credit of 100% for contributions to scholarship granting organizations
  • This will start in 2027, and the contribution limit is $1,700.
5. Gift and estate tax exemption raised
  • The exemption was raised to $15M for single filers or $30M for joint filers.
  • This will begin in 2026 and will adjust with future inflation.
6. The introduction of trump accounts
  • Set to begin in July 2026, these are a new type of IRA retirement savings option for children that can be opened and funded until the beneficiary turns 18.
  • Individual contributions of up to $5,000 per year can be made and will be indexed to inflation.
  • The U.S. government will jumpstart the program by offering new Trump Accounts a $1,000 credit.
7. OBBBA creates a permanent version of the qualified opportunity fund (QOF) program
  • These funds allow investors to pool capital into Qualified Opportunity Zones (QOZs), which are low-income geographic areas designated by state governments.
  • Starting in 2027, investors can defer capital gains by reinvesting them into a QOF, with deferral lasting until the earlier of when the property is sold or exchanged or five years after the original investment.
  • These changes apply only to new QOF investments made starting in 2027.

As always, we’re here to help clarify these new changes and discuss your specific plans. Please feel free to reach out to us any time.

Source: Kitces

Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

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