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Tax reform enacted in July 2025 will introduce meaningful changes to charitable giving rules when provisions take effect in 2026. The legislation expands deductions for non-itemizers (up to $1,000 for individuals and $2,000 for joint filers) potentially broadening participation among everyday donors.
At the same time, it sets a new floor for itemizers, lowers the charitable deduction cap for high-income donors to 35%, and establishes a 1% minimum giving requirement for corporations seeking deduction eligibility. Several federal funding streams will also contract, adding complexity for organizations planning ahead.
Historical data suggests these shifts might influence who gives, how much they give, and when they choose to give. During the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) period from 2020 to 2021, the government allowed people who typically took the standard deduction to claim a small charitable deduction,” according to Meghan Davison, executive vice president at CCS Fundraising. While modest, the incentive coincided with broad participation, with tens of millions of households contributing an estimated $30 billion to charity during that period.
For major donors, the introduction of a new 0.5% adjusted gross income (AGI) floor on cash gifts and a deduction cap might influence the timing and structure of giving, according to Davison. Prior tax policy shifts suggest donors might concentrated giving at the beginning and end of upcoming calendar years. In response, fundraisers can align stewardship, campaign pacing, and calendar-year planning more closely with evolving donor behavior.
The impact of these changes will not be felt evenly across the sector. Organizations that rely more heavily on government funding or serve communities affected by changes in public benefits may experience different planning considerations, while others may see shifts primarily in donor mix and timing.
Analysts estimate these adjustments could contribute to a $4.1 billion to $8.2 billion decline in giving from high-income households during the next decade and an annual $4.5 billion drop in corporate philanthropy. These projections are prompting nonprofit leaders to reassess donor pipelines, timing strategies, and revenue diversification plans.
Amid these shifts, some leaders see opportunity for renewed engagement. “This is a time to rethink and reengage, not withdraw,” said Davison. “When policy changes, it creates new pathways for generosity.”
Fundraisers anticipate growing interest in timing-based approaches, such as evolving “bunching strategies,” that could influence when donors choose to concentrate giving. Boards and staff are also preparing for operational impacts as they monitor potential changes in federal support and adjust internal planning.
Federal funding adjustments might increase the importance of private philanthropy for some organizations. Changes to grant funding and public programs could raise demand for nonprofit services. In this environment, fundraising communications can emphasize urgency, community need, and long-term sustainability to connect more strongly with donors.
The effects of 2025 H.R.1 on donor behavior will continue to unfold across the industry in the coming years, she said. Even as rules shift, mission resonance, community need, and relationship-driven engagement continue to anchor generosity, offering nonprofits a steady foundation in a changing policy landscape.
