One Big Beautiful Bill Act and Charitable Giving in 2026: Guidance for Fundraisers

By Robert E. Wahlers and Michelle Hurley

The passage of the One Big Beautiful Bill Act (also known as OBBBA, H.R. 1, or the 2025 Reconciliation Act) on July 4, 2025 introduces several changes to charitable giving that take effect in 2026. These modifications present both opportunities and strategic challenges for nonprofits and their donors. Here are key insights and recommendations to help fundraising professionals make the most of these changes.

Tax Law Changes to Charitable Giving

1. Expanded Charitable Deduction for Non-Itemizers

Beginning in tax year 2026, individuals who do not itemize on their federal tax return will now be eligible for a fixed charitable deduction (up to $1,000 for single filers and $2,000 for joint filers) on cash donations to public charities. Gifts made to donor-advised funds, supporting organizations and private foundations are not eligible for this deduction.

This change is expected to generate significant giving by activating everyday donors.

2. Permanent 60% Limit for Individual Cash Contributions

The Tax Cuts and Jobs Act of 2017 (TCJA) increased the deduction limit for cash contributions made by individuals to qualifying organizations from 50% to 60% of the taxpayer’s contribution base (basically, their adjusted gross income) for the taxable year. This provision was set to expire after 2025, but the OBBBA made it permanent.

This permanent extension of the limit continues the incentive for individuals to make larger cash donations.

3. New Tax Credit for Contributions to “Scholarship Granting Organizations” 

Beginning in tax year 2027 or later, a new tax credit of up to $1,700 (subject to reductions based on similar allowable credits on state tax returns) will be available to US citizens and legal residents who make a cash donation to any 501(c)(3) organization that qualifies as a public charity and meets specified requirements, including using the donation to fund scholarships for eligible students and their qualified elementary or secondary education expenses.

Scholarship granting organizations may see a boost in individual donations due to this new tax credit.

4. 0.5% AGI Floor for Itemizers

Itemizing taxpayers now face a new rule: only donations exceeding 0.5 percent of their adjusted gross income (AGI) are deductible. This floor applies alongside the existing cap of 60% of AGI for cash contributions, which the law makes permanent.

Additionally, itemizers in the top (37 percent) tax bracket will receive a reduced benefit, only $0.35 per dollar donated, even if their marginal rate remains 37 percent.

5. 1% Floor for Corporations

Corporations may now only deduct charitable contributions that exceed 1 percent of their taxable income, up to a longstanding ceiling of 10 percent. Contributions below the 1 percent floor are not deductible, though excess contributions over 10 percent may be carried forward up to five years—with adjusted rules for the floor.

A Strategic Approach for Fundraising Professionals

Engage Everyday Donors Through the New Deduction
The reinstated deduction for non-itemizers is a compelling activation opportunity. Organizations should highlight how even a modest gift qualifies for this benefit and explore campaigns that resonate at lower entry points.

Help Itemizers Plan Around the Floor and Cap
For itemizers, the floor and reduced deduction value incentivize donation planning and bunching strategies. For instance, timing larger gifts every few years to exceed the 0.5% threshold meaningfully. Financial advisors can work with donors to model scenarios that optimize net after-tax impact.

Support Corporate Partnerships Strategically
Corporate donors must now commit at least 1 percent of income annually to qualify for deductions. Nonprofits may craft multi-year sponsorships, joint initiatives, or pooled campaigns that help corporations easily exceed that threshold. Clear alignment with corporate CSR goals becomes more vital than ever.

Promote Scholarship-Granting Organizations, Where Available
In jurisdictions where SGOs qualify, institutions may highlight the $1,700 tax credit, steering donors toward gifts that offer maximum tax leverage. This requires nonprofits to understand which SGOs are qualified and how donors’ state tax situations interact.

Refresh Estate and Major Gift Conversations
The OBBBA also makes permanent the 60 percent AGI limit and increases the estate and gift tax exemption (to $15 million individual / $30 million joint, indexed). These pave the way for smarter bequest design and major-gift conversations aligned with values and legacy goals.

Framing the Opportunity

With thoughtful positioning, the One Big Beautiful Bill Act can be framed as a moment of empowerment. It invites a broader constituency into giving and encourages strategic generosity among high-capacity donors and corporations. Still, it demands savvy advisory work to help staff and donors navigate complexities. As you move forward, be sure to partner with your trusted accounting professionals to stay aligned with any tax laws as they relate to your donors and organization.

Key Takeaways for Fundraising Leaders:

• Utilize the universal deduction to activate everyday donors.
• Coach itemizers on timing and structuring gifts to overcome floors and caps.
• Design corporate engagement opportunities that qualify under the 1 percent rule.
• Use SGO credits to drive school-focused gift investments, where applicable.
• Incorporate updated estate and tax frameworks into giving strategies.

By understanding and adapting to these changes, development professionals can make the most of these opportunities and ensure their nonprofit continues to thrive throughout 2026 and beyond.