The federal tax code is widely regarded as one of the most complex legal frameworks in the world. Spanning thousands of pages, it includes intricate rules, exceptions, and frequent updates that challenge even seasoned professionals. Its complexity stems from overlapping provisions, specialized deductions, and the need to reconcile federal, state, and local tax laws. Charitable giving rules are particularly convoluted.
The recently enacted One Big Beautiful Bill Act includes a game-changing shift in how charitable contributions are treated for both itemizers and non-itemizers. For the first time in years, non-itemizers can claim a charitable deduction: up to $1,000 for single filers or $2,000 for married couples filing jointly. This deduction could open the door for broader participation in charitable giving for those who take the standard deduction.
But the bigger change is for itemizers. Starting in 2026, a 0.5% floor will apply to charitable deductions. That means only the portion of a taxpayer’s charitable contributions that exceeds 0.5% of their adjusted gross income will be deductible. For corporations, the floor is 1%, and the deduction remains capped at 10% of taxable income.
With the new limits taking effect in 2026, the remaining days of 2025 are critical for charitable gift planning. Taxpayers who itemize may want to consider front-loading their charitable giving this year. One option available is to establish and then contribute to a donor-advised fund in 2025, which allows donors to take the full deduction under current rules, while distributing funds to charities over time — even after the new floor takes effect in 2026.
For those who are charitably inclined, 2025 is the year to act. Advisors, CPAs, and estate planning attorneys should be talking to individuals and businesses now about how to optimize their giving strategies before these changes go into effect.
Jones Walker is proud to help lead the way forward for Louisiana individuals and businesses navigating an evolving and complex tax environment.