Big tax law changes coming in 2026: What they mean for charitable giving

A major new federal law will change the way many people plan their taxes, estates and charitable giving beginning in 2026.

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, makes permanent several tax provisions from 2017 and adds new rules that will shape how individuals support organizations like the Owen County Community Foundation (OCCF).

"These changes bring more certainty to families planning ahead," reported OCCF president & CEO, Janet Rummel. "But they also mean donors should be aware of new opportunities and challenges."

A More Stable Tax Landscape

The new law locks in several key tax provisions that were scheduled to expire in 2025:

• Estate and gift tax exemption rises to $15 million per person ($30 million for couples).
• Standard deduction increases to $15,750 for single filers and $31,500 for joint filers.
• Top income tax rate stays at 37 percent instead of reverting to 39.6 percent.

For families considering legacy gifts or larger contributions, this stability provides a clearer framework for long-term planning.

Changes That Affect Giving

Several new rules directly impact charitable donors:

• Deduction for nonitemizers: Starting in 2026, taxpayers who don't itemize can deduct up to $1,000 (single) or $2,000 (joint) in cash gifts to public charities like OCCF. This does not apply to Donor Advised Funds or private foundations.

• "Giving floor" for itemizers: Donors who itemize must now contribute at least 0.5 percent of their adjusted gross income (AGI) before gifts are deductible. For example, with an AGI of $100,000, the first $500 in giving cannot be deducted. This may encourage donors to "bundle" multiple years of giving into one larger gift.

• Cap for high-income donors: Those in the top 37 percent tax bracket will see deductions capped at 35 percent of income. Donors considering significant contributions may want to act in 2025 to maximize benefits.

• Cash gift deduction limit stays high: Donors may continue to deduct cash gifts up to 60 percent of AGI, a rule now made permanent.

• Extra deduction for seniors: From 2025 through 2028, taxpayers age 65+ can claim an additional $6,000 deduction, even without itemizing. The benefit phases out above $75,000 for single filers and $150,000 for couples.

What Donors Can Do Now

While most people give because they care about causes, tax incentives often affect how much and when they give. OCCF encourages donors to review their situation and consider steps such as:

• High earners: Talk with your advisor about making gifts before the end of 2025 to avoid new limits.
• Annual givers: Consider combining two or more years of giving into one larger gift to clear the new deduction floor.
• Nonitemizers: Plan to use the new $1,000/$2,000 charitable deduction starting in 2026.
• Seniors: Factor in the additional $6,000 deduction when planning your charitable support.

Lasting Impact in Owen County

"Tax laws may shift, but the impact of your giving here at home does not," said OCCF staff. "Every gift helps strengthen Owen County, whether you're supporting education, youth programs, community spaces or local nonprofits. We're here to help donors make the most of these new rules while continuing to support the causes they love."

Residents with questions about how the new tax law may affect their charitable giving are encouraged to contact the Owen County Community Foundation at 812-829-1725, email operations@owencountycf.org, or visit owencountycf.org.

The Owen County Community Foundation does not provide legal, tax or financial advice. Donors should consult with their own advisors to determine the most appropriate strategies for their individual circumstances.