New Tax Laws That May Affect You!
Changes to the tax law under the One Big Beautiful Bill Act (OBBB), may impact your tax planning for charitable contributions to the Catholic Schools Foundation beginning in 2026. How these changes may affect you will depend upon your unique financial circumstances and whether or not you itemize your income tax deductions.
Below are some topics for your consideration to help with your charitable gift and tax planning:
Take Action in 2025: Maximize Your Giving Before New Rules Begin in 2026
Tax law changes are coming in 2026 that will reduce the value of charitable deductions. By giving in 2025, you can maximize your impact and your tax savings before these new limits take effect.
Here’s why acting now matters:
Deduct the full value of your gift in 2025. Starting in 2026, the first 0.5% of your Adjusted Gross Income will no longer be deductible.
Lock in higher tax savings. Donors in the top bracket currently save at 37%, but that benefit will drop to 35% in 2026.
Make the most of your IRA. If you are age 73 and must take a Required Minimum Distribution (RMD), your QCD gift can satisfy your RMD without increasing your income taxes.
Bundle your giving for a bigger impact. Bunching multiple years of donations into 2025 ensures you receive the greatest tax benefit now, while still allowing you to support CSF in future years through a Donor-Advised Fund.
The bottom line: Giving in 2025 means bigger benefits for you and life-changing opportunities for CSF students.
New Tax Laws Starting 2026
For Itemizers (Higher-Income Donors):
New 0.5% Floor: Beginning in 2026, only the contribution value in excess of 0.5% of your contribution base will be deductible.
New 35% limit: Beginning in 2026, the charitable deduction reduces total taxable income, and the dollar value of the deduction will be limited to 35% for donors in the 37% bracket.
For Non-Itemizers (Most Donors):
New Deduction: The OBBB creates an “above-the-line” deduction for charitable contributions from donors who do not itemize their income tax deductions.
Beginning in 2026, non-itemizers will be able to deduct up to $1,000 (single filers) or $2,000 (married filing jointly) directly from their gross income. This is good news for the majority of donors who currently choose the Standard Deduction. However, contributions to donor-advised funds (DAFs) are not eligible for the new non-itemizer deduction.
For Corporations:
New Floor on Deductions: Similar to individuals, corporations will have a 1% floor on their charitable deductions. The corporation will be allowed to deduct only contributions that exceed 1% of corporate taxable income. Corporations may choose to “bunch” contributions by combining multiple years of donations into a single year to meet the 1% threshold.
Estates:
Permanent Higher “Tax-free” Threshold: The OBBB makes permanent and indexes for inflation the higher exemption from Gift and Estate taxes which was set to expire at the end of 2025. This means individuals will be able to pass a total of $15 million in lifetime and estate giving to heirs with no Federal tax.
Overall Impact:
Although the OBBB has introduced some changes, the law still provides generous tax incentives to encourage your charitable contributions. Depending upon your circumstances, you may enjoy significant tax savings with a gift of appreciated securities or a Qualified Charitable Distribution from your IRA. A life income gift can provide a lifetime of income to you along with current tax savings.
