The 2025 Tax Bill: What You Should Know
On July 4, 2025, the federal “One Big Beautiful Bill” was signed into law. The legislation includes several provisions related to charitable giving and other tax updates, with some changes taking effect in 2025 and others in 2026. Highlights include:
Key Tax Changes
- Increased state and local tax deduction (SALT). Beginning in 2025, the SALT deduction for itemizers increases from $10,000 to $40,000. The cap will revert to $10,000 in 2030.
- 2025 standard deduction increases to $15,750 for single filers and $31,500 for joint filers.
- Additional deduction for taxpayers 65 and older. For tax years 2025 through 2028, individuals who are age 65 and older (including non-itemizers) may claim an additional deduction of $6,000 per taxpayer ($12,000 for couples filing jointly). This deduction phases out if your adjusted gross income (AGI) exceeds $75,000 (single filers) or $150,000 (joint filers).
- Estate and Gift Tax exemption increases to $15M per individual ($30M per married couple) for the 2026 tax year and is indexed for inflation.
Charitable Donations – Opportunities and Challenges (Starting in 2026)
- New tax break for non-itemizers. Individuals will be able to deduct charitable gifts up to $1,000 per taxpayer ($2,000 for joint filers), even if they don’t itemize. Gifts must be made to a qualified public charity; contributions to donor-advised funds and non-cash gifts do not qualify.
- Deduction limit for top tax bracket. For taxpayers in the top income tax bracket of 37% who itemize, charitable deductions will be capped at 35%.
- Giving floor for itemized deductions. For taxpayers who itemize, only the portion of annual charitable giving that exceeds 0.5% of their AGI will be deductible. For example, a taxpayer with an AGI of $100,000 who makes charitable gifts totaling $2,500 would receive a charitable deduction of $2,000; the first $500 (i.e., 0.5% of $100,000) is non-deductible.
Planning strategies to consider:
- Don’t itemize? Don’t forget the new $1,000-$2,000 deduction for charitable gifts made in 2026 that you may claim in addition to the standard deduction.
- High tax bracket? Ask your advisor if it makes sense to give more to charity in 2025, before the new limits take effect.
- Donate every year? Make a multi-year plan for your charitable giving to achieve the best tax outcome. You may consider “bunching” donations by combining two (or more) years’ worth of giving into a single calendar year. With the new increased standard and bonus deductions and giving floor reductions in 2026, this can be an effective strategy to ensure you are maximizing your tax savings while supporting organizations you love.
Questions? Reach out to Duke Gift Planning at giftplanning@duke.edu. Our team can work with you and your advisors to review options and develop a tax-savvy charitable plan.
This information is provided for educational purposes and with the understanding that neither Duke University nor the authors are providing legal, accounting, or other professional advice or counsel. Please consult your personal counsel about the financial, tax, and legal implications of any gift.
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