The One Big Beautiful Bill Act: What Donors Need to Know Before 2026
November 10, 2025
To ensure our donors and fundholders have the most up-to-date information about how recent federal legislation will impact charitable giving for the remainder of 2025 and into 2026, the Community Foundation recently hosted a virtual town hall conversation, featuring insights, guidance, and analysis from Farhad Aghdami.
Farhad is Williams Mullen's Richmond Managing Partner and an Ex Officio member of the Community Foundation’s Board of Governors. Entitled “The One Big Beautiful Bill Act: What Donors Need to Know Before 2026,” this conversation was a great opportunity to keep individuals and families engaged, provide thoughtful analysis of this complex legislation, and prepare members of our community how to ensure charitable gifts have the greatest impact. The full recorded session can be watched below.
We have pulled together five of the most important takeaways from this conversation.
Increased Estate and Gift Tax Exemptions
As Farhad discussed, the One Big Beautiful Bill Act (OBBBA) "permanently" increases the federal estate and lifetime gift tax exemption to $15 million for individuals and $30 million for married couples filing jointly in 2026, and indexed for inflation thereafter.
For clients with estates under $15 million, Farhad suggested that estate plans could be simplified and more complex trust structures removed. Clients could use non-probate transfers, such as beneficiary designations, titling of assets, and transfer on death registrations to simplify planning. For estates between $15 million and $30 million, he suggested looking for ways to ensure your estate stays below $30 million. Staying with your current estate plan is likely the best approach for estates estimated to be over $30 million.
For clients who created a trust many years ago and who now have assets that have appreciated in value, he suggested these individuals and families could consider adding a general power of appointment to the trust to cause estate tax inclusion. This could provide a step in basis and reduce the gain on appreciated assets inside the trust.
New Limits on Deductions
The OBBBA extended the top income tax bracket at 37% and increased the standard deduction in 2026 to $16,000 for singles and $32,000 for couples (up from $15,750 for singles and $31,500 for couples in 2025).
Another adjustment the OBBBA made is to the cap on deductions for state and local income, sales, and property tax (SALT), raising this from $10,000 to $40,000 for 2025 - 29 for those with an AGI under $500,000.
Farhad acknowledged that there is a widespread concern that these new limitations may have an adverse effect on estates and trusts, and identified several poor drafting decisions in the legislation which resulted in unintended consequences.
A Mixed Bag for Charitable Deductions
The good news is, OBBBA makes permanent the 60% AGI limitation for gifts of cash to public charities. The bad news is that starting in 2026, there will be a floor 0.5% of a donor’s AGI for charitable itemized deductions. For example, if your AGI is $1M, the first $5,000 of charitable contributions will not be deductible. There is also a provision taking place in 2026 that will limit the value of all itemized deductions for donors in the 37% tax bracket and will reduce the tax benefit to the 35% tax bracket - a 2/37ths haircut.
Farhad explained that these new limitations on deductions will reduce the benefit of charitable contributions for itemizers in 2026, so it could be advantageous to accelerate your charitable contributions by bundling your 2025 and 2026 giving in 2025. Donor advised funds provide a perfect vehicle to do this. By prefunding your donor advised fund in 2025, you can sustain your philanthropy over multiple years and maximize deductibility.
For those who take the standard deduction, starting next year, the new law also provides an above-the-line deduction of $1,000 for individuals or $2,000 for married couples filing jointly. Qualifying gifts must be cash-only and need to go directly to charity, not to a donor advised fund. You can claim this even if you take the standard deduction.
University Endowments
The OBBBA introduced a new tiered tax system for some private colleges and universities that have large endowments and 3,000 or more students. For affected universities, the new rules will tax between 1.4-8% of the investment income of their endowments. If a donor wanted to make a large gift to their alma mater, but it's one of the affected schools, then adding to the school's endowment could risk increasing that tax burden and diluting the charitable impact of the gift. Farhad explained that an alternative solution that donors could consider is creating an endowed designated fund at a community foundation that would not count in the school's endowment total and would make annual grants to the school for the intended purpose, such as a scholarship.
Embrace Both New and Old Ways to Plan by 12/31
Taking all of these changes into account, Farhad suggested that those planning ahead should consider both new and old ways to approach the impacts of the OBBBA. Here are strategic moves to take before 12/31:
* Consider donating appreciated stock, thereby avoiding capital gains tax especially as many securities have seen significant increase in value.
* Bunching your 2025 and 2026 giving in 2025 to avoid the two “cuts” bracketing deductibility in 2026. A donor advised fund allows you to contribute once, receive more of a deduction in 2025, and grant to nonprofits on your timeline.
* If you have to take a Required Minimum Distribution (RMD) from your IRA but don’t want to claim it as income, make Qualified Charitable Distributions from your IRA (of up to $108,000 in 2025) directly to charities. While this gifting mechanism does not qualify for a deduction, it satisfies your RMD and supports causes you care about.
* Keep the 60% AGI ceiling in mind. If you are gifting above that, it could be eligible for carryforward.
When in Doubt, Contact Your Advisor
The OBBBA has added a degree of complexity to taxes in 2026 and beyond. There are advantages to accelerating your charitable giving in 2025 as well as updating your planning in 2026 and beyond. Given that everyone’s philanthropic and financial goals are unique, please consult your financial advisor and tax professional for the options best for you.
The staff at the Foundation is also available to talk through how you can maximize your philanthropic impact in the community in light of OBBBA.