Tax Bill Changes Seek to Make Charitable Giving More Attractive

Congress wants to make it easier—and more appealing—for Americans to give to charity. Both the House and Senate have introduced proposals that would revive the charitable deduction for taxpayers who don’t itemize, a tax benefit that was largely erased by the 2017 tax law.

When the 2017 tax law doubled the standard deduction, far fewer people itemized, dropping from about 37 million in 2017 to just 12 million by 2022, according to IRS data. That shift meant most Americans lost the tax incentive to give, and charities have felt the impact, especially from small and mid-size donors.

While the two chambers differ on the details, they agree on the goal: encourage broader giving, especially from small donors whose contributions declined after the standard deduction was expanded.

What’s on the Table?

The Senate version would allow nonitemizers to deduct up to $1,000 (or $2,000 for married couples) beginning in 2026, permanently. For someone in the 22% tax bracket, that could mean a $220 tax savings on a $1,000 gift.
The House version is more modest: a temporary deduction of $150 for individuals and $300 for joint filers, available from 2025 through 2028.

Both versions also impose new limits on higher-income itemizers:

Charitable deductions would only count for the portion that exceeds 0.5% of adjusted gross income (AGI).
A proposed cap would limit the tax benefit of all itemized deductions—including charitable gifts—to 35 cents on the dollar, even for taxpayers in higher brackets.

These changes could reshape how—and how much—people give. According to research, the 35% cap alone could result in up to $8 billion in lost charitable donations annually.

What It Means for You

While it’s unclear what the final version of the bill will look like—or if it will pass at all—this conversation is a powerful reminder that charitable giving should be part of your financial plan, not just a year-end afterthought.

Whether you itemize or take the standard deduction, aligning your giving strategy with your tax situation can:

Maximize the impact of your donations
Control your taxable income
Support the causes you care about in a sustainable, thoughtful way

Planning Matters More Than Politics

Regardless of how this shakes out in Congress, what matters most is having a plan. Tax rules will continue to evolve, but a well-structured approach to charitable giving can offer clarity, flexibility, and meaningful impact, no matter what the IRS or Capitol Hill decide.

If you're interested in building charitable giving into your broader plan—or simply want to know how these proposals could affect you—let's talk.