Now that the One Big Beautiful Bill (H.R. 1) has been signed into law, it is essential to understand its impact on philanthropy, particularly on your giving goals and objectives. One thing has not changed: Philanthropy continues to be the best way for individuals, corporations, foundations, nonprofits, and others to ensure Middle Tennessee thrives.
Community Foundation of Middle Tennessee has been your trusted partner in philanthropy for nearly 35 years and will continue this role into the future. To understand how the bill may or may not impact your philanthropic objectives, below is a brief synopsis.
Increased standard tax deduction
The standard deduction, which was increased by the Tax Cuts and Jobs Act of 2017 (TCJA), was made permanent, raising the standard deduction for the 2025 tax year to $15,750 for single filers and $31,500 for those filing jointly. The new law also expands the “bonus” deduction for taxpayers 65 and older through 2028.
Additionally, individuals who itemize can claim charitable deductions only to the extent that those deductions exceed 0.5% of their adjusted gross income (AGI). Taxpayers in the top bracket can claim a 35% tax deduction for charitable gifts instead of the 37% that would otherwise apply to their income tax rate. The final bill permanently extends the 60% AGI contribution limitation for cash gifts to qualifying charities.
Planning Tip: Accelerating your giving in 2025 to avoid the increasing limitations after this year is one option. “Bunching” multiple years of giving is a strategy some donor advised fundholders have used previously.
Non-itemizers can take a charitable deduction
After 2025, a charitable deduction of $1,000 for single filers and $2,000 for married taxpayers filing jointly will be allowed. As before, this does not include gifts to donor advised funds, but may include contributions to scholarship funds, designated funds, unrestricted gifts, and more.
Planning Tip: Your CFMT relationship manager can help you meet your philanthropic goals. We can also work with your professional advisor so you can maximize your options to give back.
Estate tax exception remains in place
The new law makes permanent the increase in the unified credit and generation-skipping transfer tax exemption threshold. For 2025, that will be $13.99 million for single filers and $27.98 million for married filing jointly. Next year, these amounts shift to $15 million and $30 million, respectively.
Planning Tip: There is no guarantee that the estate tax exemption will stay at this level forever. Now may be a good time to work with your relationship manager and professional advisor to review your charitable giving and estate planning strategy.
This information summary is for educational purposes only. Please consult your professional advisor for tax or legal advice.
