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The One Big Beautiful Bill could change the calculus for these giving vehicles. By Ben Mattlin

“ The changes in the tax code due to OBBBA have significantly impacted planning for charitable contributions,” says Tony Blagrove at Traveka Wealth in Los Altos, Calif.

From 2026 onward, only itemized charitable contributions that exceed 0.5 % of a taxpayer’ s modified adjusted gross income can be deducted. Donations below that threshold cannot be taken as deductions at all.( For corporate donors, the floor is 1 % of income.) Also starting next year, the upper limit for charitable deductions is 35 % of MAGI— even for clients at the highest tax bracket of 37 %.

Therefore, clients who want to make large gifts and maximize their tax benefits should not wait to act, advisors say. Moreover, those who give to a donor-advised fund before the end of the year can deduct the entire amount of the donation this year if they itemize and stretch their charitable gifts into next year and beyond, says Richard Pon, a CPA and certified financial planner in San Francisco.“ For taxpayers who can itemize deductions, a [ donor-advised fund ] is a perfect vehicle in 2025,” he says.

Half of the donation, or whatever percentage the donor chooses, will go to a charity they select this year, and the remainder will go in future years. But since they claimed the whole deduction in 2025, they must forgo subsequent deductions for the donation.

Charitable deductions can only be taken by taxpayers who itemize— which is about 10 % of American households, according to the Urban Institute. In general, you can only itemize deductions if your total for charitable gifts, unreimbursed medical expenses and other allowable items is greater than the standard deduction, which is $ 31,500 for joint filers and $ 15,750 for individuals in 2025( rising to $ 32,200 and $ 16,100, respectively, in the 2026 tax year), plus there’ s $ 1,600 more in standard deductions for those age 65 and older($ 1,650 in 2026), who can furthermore claim an extra“ senior bonus” deduction of $ 6,000, thanks to the One Big Beautiful Bill.

The senior bonus, however, gradually decreases if the clients’ taxable income exceeds $ 150,000( if they are joint filers) or $ 75,000( if they are individuals). It phases out completely if the couple’ s modified adjusted gross income hits $ 250,000 or individuals’ MAGI hits $ 175,000. The senior bonus limits do not change in 2026. But in 2028, the senior bonus will disappear completely unless Congress acts.( Certain entities such as estates and trusts must always itemize.)

What Donor-Advised Funds Do

Donor-advised funds work differently from other charitable gifts— they’ re pools of charitable dollars put into an investment account managed by a 501( c)( 3) sponsor organization. The sponsor oversees all administrative details for the account, but the donor-owner is the principal advisor, deciding how the

40 | FINANCIAL ADVISOR MAGAZINE | DECEMBER 2025 WWW. FA-MAG. COM