How the 2025 Tax Reform Act Impacts Our Supporters

A New Era for Giving

As we look toward 2026, a landmark shift in the U.S. tax code is set to change the landscape of philanthropy. While the recent federal legislation introduces various fiscal updates, its most significant victory for the nonprofit sector is a new, permanent incentive for everyday donors.

Typewriter with a tax return in it.

The "Universal" Deduction: Giving for All

For years, the tax benefits of charitable giving were largely reserved for the roughly 10% of taxpayers who "itemize" their deductions. Because the standard deduction is so high, nearly 90% of Americans have been unable to claim their donations on their tax returns.

Starting in 2026, that changes. A new "above-the-line" deduction will allow taxpayers who take the standard deduction to also deduct their charitable contributions.

  • Individual Filers: Can deduct up to $1,000 in cash gifts.

  • Joint Filers: Can deduct up to $2,000 in cash gifts.

This provision effectively democratizes tax incentives, ensuring that a much larger portion of our community receives a financial benefit for their generosity.

Important Guidelines for Donors

To ensure your gifts qualify for this new deduction in 2026, keep these three rules in mind:

  1. Cash Only: The deduction applies specifically to cash, check, or credit card contributions.

  2. Direct Impact: Contributions must be made directly to a qualifying 501(c)(3) public charity. Gifts to Donor-Advised Funds (DAFs) or Supporting Organizations are not eligible for this specific non-itemizer deduction.

  3. Standard Filers Only: If you already itemize your deductions, you will continue to use the standard itemized deduction process (which is also facing new 0.5% "floor" requirements under the same law).

What This Means for Our Mission

This change is expected to generate significant support for nonprofits nationwide—by some estimates, as much as $74 billion over the next decade. For organizations like ours, it means that every gift of $25, $50, or $100 now carries an extra incentive for the donor.

Whether you are a lifelong supporter or considering your first gift, this new law recognizes that every contribution matters, regardless of your tax bracket. By incentivizing the "standard filer," the OBBB Act encourages a broader, more resilient base of support for the causes that keep our communities thriving.

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Cyndy Tabor