As you may have seen in our last fund statement report, the One Big Beautiful Bill Act (OBBA) has implications for charitable giving, specifically the rise in the standard deduction and the introduction of a 0.5% charitable floor for individuals. These changes may influence how and when you choose to give, making it an ideal time to revisit your philanthropic strategy.
One approach that can help you continue giving effectively while maximizing tax benefits is charitable tax bunching. This strategy involves combining several years’ worth of charitable contributions into a single tax year, allowing you to exceed the standard deduction and itemize your charitable gifts. In subsequent years, you can take the standard deduction while continuing to recommend grants from your donor advised fund (DAF) to support nonprofits at your own pace.
Because the OBBA introduces a 0.5% floor for charitable deductions—meaning you’ll only receive a deduction for contributions exceeding 0.5% of your adjusted gross income (AGI)—smaller annual gifts may no longer qualify for a deduction. Bunching multiple years of giving into one tax year can help you surpass that threshold and preserve your tax advantages.
Additionally, the law caps the deduction benefit at 35% for top-bracket taxpayers, making 2025 an advantageous year to consider a larger gift before the new rules take effect.
Let’s look at how the One Big Beautiful Bill Act (OBBA) could affect a high-earning couple—and how charitable bunching can help them make the most of their giving.
Example:
Jane and Tom are a married couple who earn $400,000 per year and file jointly. Their income places them in the 35% federal tax bracket, meaning for every dollar they deduct, they save about 35 cents in taxes. (Their overall tax rate is lower, but their charitable deductions reduce income at this top marginal rate.)
Each year, they typically give $50,000 to nonprofit organizations and claim $10,000 in other itemized deductions, such as mortgage interest and state and local taxes.
In 2025, there is no charitable deduction floor. Starting in 2026, however, the OBBA introduces a 0.5% charitable floor, meaning donations up to 0.5% of their adjusted gross income ($2,000) will not be deductible.
By bunching two years of gifts into 2025, Jane and Tom can maximize their tax deduction now, avoid the new 2026 deduction limits, and still make consistent grants to nonprofits from their donor-advised fund (DAF).
By bunching two years of giving into 2025, Jane and Tom receive approximately $49,525 in total tax benefit across two years—compared to $41,300 if they give annually. That’s an extra $8,225 in tax savings, all while maintaining steady support to the nonprofits they care about.
As you can see, charitable tax bunching allowed Jane and Tom to maximize their tax efficiency, avoid the new charitable floor, and maintain their regular giving through their donor-advised fund. If their approach resonates with you, charitable bunching could be a powerful strategy for your own giving. A member of the Philanthropy Department would be happy to discuss how this might work for you—alongside your financial planner—so you can make the most of your philanthropy.
