New Tax Law For Charitable Giving in 2025

Not only does charitable giving make you feel good about supporting causes you care about, but it may also have important tax benefits. The new Tax Act passed in July 2025 made some important changes to the tax provisions for charitable contributions that could make it more beneficial for people who itemize to consider giving this year — as they may see some reductions in the amounts they can deduct in the future. In contrast, non-itemizers could see greater tax benefits in future years. 

Two key changes may make 2025 an especially important year to review your charitable goals and explore new giving strategies and opportunities: 

• Itemizer Threshold: Starting in 2026, charitable contributions will be deductible only to the extent they exceed 0.5% of your adjusted gross income (AGI). For example, if your AGI is $100,000, only charitable gifts exceeding $500 would be tax deductible. 

• Top-Bracket Limitation: If you are in the 37% tax bracket, your charitable deductions will be limited to a 35% rate. This means a $100,000 charitable gift that currently provides a $37,000 tax benefit would provide a $35,000 benefit starting in 2026—a difference of $2,000.

As a reminder: 

Starting at age 70½, a QCD (Qualified Charitable Distribution) is a direct transfer of money from your IRA provider, payable to a qualified charity. QCDs can be counted toward satisfying your required minimum distributions (RMDs) for the year. At age 73, RMDs are mandatory.   

The Watershed Institute’s Advancement Office can help with any additional questions regarding charitable giving to protect clean, safe, and healthy water in New Jersey.

Please contact Senior Director of Advancement, Maggie Kelly, at 609-737-3735 ext. 36 or [email protected].