New Tax Law Brings Big Changes for Philanthropy

Posted July 21, 2025 under: ,

Updated: July 24, 2025

The One Big Beautiful Bill Act was signed into federal law this past month and is reshaping how individuals, corporations, and nonprofits approach charitable giving. Here’s what you need to know:

Private Foundations

  • No new taxes: Proposals to increase the excise tax on investment income and change rules on excess business holdings were dropped.

Corporate Giving

  • New 1% giving floor: Corporations must now donate at least 1% of taxable income to qualify for a charitable deduction. The 10% cap remains.
  • Impact: Could reduce corporate giving by ~$4.5B annually.

Individual Giving

  • Itemizers:
    • Tax benefit capped at $0.35 per dollar (down from $0.37).
    • New 0.5% floor: deductions apply only to giving above 0.5% of AGI.
    • The 60% AGI limit for cash gifts is now permanent.
  • Nonitemizers:
    • Starting in 2026, a permanent deduction of up to $1,000 ($2,000 for joint filers) is available—excluding donor-advised funds.
  • Scholarship Donations:
    • New $1,700 tax credit for gifts to K–12 scholarship-granting charities.
  • Standard Deduction:
    • Increased to $15,750 ($31,500 for joint filers) in 2025, indexed to inflation.

Nonprofit Sector

  • Executive Compensation: A 21% excise tax now applies to nonprofit salaries over $1M.
  • No changes to unrelated business income tax (UBIT) or rules on terrorism-related revocations.
  • New “Trump Accounts”: Tax-advantaged savings accounts for children’s education and housing. Charities can contribute under specific rules.

Higher Education

  • Excise tax on endowments:
    • 1.4% for assets $500K–$750K per student
    • 4% for $750K–$2M
    • 8% for over $2M

Learn more about these changes and check in for updates from the Council on Foundations as implementation unfolds.

Questions about how this will affect your charitable giving? We’re here to help. Contact our team at stewardship@cflouisville.org or call 502.585.4649.