New Tax Law: What’s Staying, What’s Changing and What It Means for You [Plus, Get Your Free Download!]

Lynn M. Gaumer, J.D., CAP^® has been tracking the progress of major tax legislation moving through the U.S. House and U.S. Senate and just signed by the president. In today’s blog, she breaks down what the new tax law means for your donors and your organization, helping you stay informed and prepared.

Newly signed tax legislation will bring lasting changes to how Americans give. Rather than letting key provisions of the Tax Cuts and Jobs Act sunset at the end of 2025, this new act extends (and makes permanent) many of those provisions and introduces several changes that will shape the charitable giving landscape for years to come.

Here’s how this legislation may impact your fundraising and planned giving strategies.

Key Provisions That Are Here To Stay

1. Income tax brackets

The new law permanently extends the 10%, 12%, 22%, 24%, 32%, 35% and 37% tax rates.

2. Higher standard deduction (with a small boost)

It also permanently extends the higher standard deduction. For 2025, the standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly. It will be indexed for inflation thereafter.

Tip: With about 90% of taxpayers now claiming the standard deduction, you may focus on gifts that provide above-the-line benefits or non-cash tax advantages, such as gifts of appreciated stock, real estate or qualified charitable distributions. Remember, Dr. Russell James found that nonprofit organizations consistently receiving gifts of stocks or bonds grew their contributions six times faster than those receiving only cash. You can also highlight the new above-the-line charitable deduction (see below).

3. Higher deduction limit for cash gifts

The act permanently extends the 60%-of-AGI (adjusted gross income) limitation for cash gifts to public charities.

Tip: Encourage your most philanthropic donors to consider blended gifts that combine cash and non-cash assets to maximize their deduction and impact.

4. Higher estate tax exemption

The federal estate and gift tax exemption will increase to $15 million per individual (indexed annually).

Tip: Only about 0.1% of estates will be subject to federal estate tax under these high exemption levels. Donors who are under the exemption amount may shift their focus to current giving where they will receive tax benefits; examples include gifts of appreciated property or qualified charitable distributions.

What’s New for Charitable Giving in 2026

1. Tax break for non-itemizers

In a notable change, the act includes an above-the-line charitable deduction, allowing taxpayers to deduct up to $1,000 for single filers and $2,000 for married couples for taxable years after December 31, 2025. For an individual in the 24% tax bracket, for example, a $1,000 donation would mean $240 in tax savings. This provision does not have an end date, and gifts to donor advised funds are excluded.

Tip: This creates a new opportunity to engage entry-level and younger donors. While these amounts are modest, history suggests they can have a big impact. During the CARES Act period (2020-21), about 90 million taxpayers took advantage of a similar, lesser deduction, contributing an estimated $30 billion to charity.

2. Giving threshold for itemizers

The new law adds a minimum charitable contribution rate for taxpayers who itemize their deductions. The law will require taxpayers to give at least 0.5% of their AGI starting in 2026 to receive a tax benefit for their charitable giving. For example, an individual with $200,000 in adjusted gross income would only get a tax break on the contributions they give beyond $1,000.

Tip: You may wish to encourage donors potentially affected by this provision to accelerate their giving this year before the new law goes into effect.

3. Limitation on charitable deduction for those in the top tax bracket

Under current law, the top income tax bracket is 37%, meaning top earners receive a tax benefit of 37 cents for each dollar deducted from their taxable income. The new law caps the tax benefit at 35 cents for each dollar of itemized deductions beginning in 2026.

Tip: Encourage your highest-income donors to give now to avoid losing tax benefits starting in 2026.

4. Increase in tax rates for university endowments

One of the more high-profile revenue-raising provisions targets certain private college and university endowments. The tax on investment earnings of large college and university endowments, currently set at 1.4%, will increase under a new tiered structure:

• $500,000-$750,000 per student: 1.4%
• $750,000-$2 million per student: 4%
• Over $2 million per student: 8%

This could result in significant new tax liabilities for major institutions. The number of affected institutions is expected to grow beyond the current 56 private colleges and universities.

Tip: Fundraisers working in higher education impacted by this provision should be prepared for potential donor concerns about reduced institutional resources and may want to reinforce the importance of planned giving and unrestricted giving.

5. Corporations required to give more to keep their deductions

The new law requires corporations to donate at least 1% of their taxable income to qualified charities to be eligible for charitable deductions for taxable years after December 31, 2025. This provision may prompt increased corporate philanthropy and open new opportunities for partnership. A corporation earning $10 million in taxable income, for example, would need to donate at least $100,000 to maintain deduction eligibility. This threshold could encourage strategic alliances between corporations and nonprofits. Fundraisers should be mindful of potential limitations, however, as it could also cap giving in some cases.

Tip: Positioning your organization as a strong, mission-aligned partner can help you take advantage of this new landscape. It’s important to diversify your funding. Stelter’s blog on this topic can help guide you.

6. Increased excess compensation tax

The excess compensation tax, currently applied to the five highest-paid employees earning over $1 million, expands to include all employees exceeding this income level.

What You Should Do Now

This new law renews the need to educate donors and refocus your messaging. Here are a few next steps:

• Update your donor communications to reflect both 2025 opportunities and new benefits beginning in 2026.
• Emphasize non-cash giving options, including stock and real estate.
• Encourage your high-net-worth donors to make strategic gifts to maximize their itemized giving this year.

Charitable giving remains one of the most powerful tools individuals have to reduce tax liability while making a lasting impact.

We recommend you begin reaching out to your supporters to remind them of your mission and alert them of how the new tax law may impact their charitable giving. To assist you with this, we are providing a letter that you can customize and use for your donor communications. Download it by clicking the button below.