Talking to Your Donors about the OBBBA Changes: Turning Tax Changes into Gift Opportunities

As we approach tax season, many of your donors may be confused when they hear whispers about the One Big Beautiful Bill Act (OBBBA) and how it might impact their charitable giving. While tax law shifts can feel daunting, these changes aren’t reasons for your donors to stop giving. In fact, a door has opened to engage donors in conversations about how to give more strategically … and give more.

As of January 1, 2026, three changes introduced by the OBBBA affect charitable gift planning. Two are potentially significant shifts for high income donors, and the third affects non-itemizers. It’s important to be ready to explain these changes not as reasons not to give, but as reasons to give more strategically. Here is a briefing and suggested talking points for planned and major gift fundraisers.

The Three Changes, Effective for 2026, Are:

1. The 0.5% floor on itemized charitable deductions

• The Rule: Donors can only deduct charitable gifts when their total giving for the year exceeds 0.5% of their “Contribution Base,” which is Adjusted Gross Income (AGI) without regard to certain Net Operating Loss (NOL) carry forwards. For most donors, the floor will be 0.5% of AGI because few taxpayers have NOL carry forwards.
  
  
• The Mechanics: This floor works similarly to an insurance deductible. If a donor has an AGI of $100,000, their “floor” is $500 ($100k x 0.05). The first $500 they give is not deductible. They only begin to accrue a tax benefit on dollar $501.
  
  
• The Impact: This may discourage small and scattered gifts and provide an incentive to “bunch” giving into fewer tax years to clear the floor significantly.

2. The 35% ceiling on the tax benefit of itemized deductions

• The Rule: For taxpayers in the top federal income tax bracket (37%), the tax savings from itemized deductions is capped at 35%.
  
  
• The Mechanics: Previously, if a top-bracket donor gave $100, they saved $37 in taxes. Beginning in 2026, a donor in the 37% marginal income tax rate will only save $35 in taxes for every $100 deducted.
  
  
• The Impact: This affects only donors whose taxable income exceeds the threshold for the 37% federal income tax bracket. In 2026, that threshold is $768,701 for joint filers and $640,601 for single filers.

3. Limited charitable deduction for non-itemizers

• The Rule: Taxpayers who do not itemize their income tax deductions are allowed to deduct contributions of cash up to a total of $1,000 per year for single filers and $2,000 for joint filers.
  
  
• The Mechanics: Previously, non-itemizers received no income tax benefit from their charitable giving. These donors are now allowed to deduct gifts of cash only (no gifts of securities or property) to a public operating charity (no DAFs, Supporting Organizations, or private foundations). Note that the 0.5% floor and 35% cap on tax savings do not apply because they affect itemized deductions only.
  
  
• The Impact: As of this writing, the IRS has not yet issued guidance, but it seems reasonable to assume that the non-itemizer charitable deduction will require substantiation similar to an itemized deduction, including a contemporaneous written acknowledgment specifying any goods or services made available as a result of the contribution.

Donor Talking Points

Fine, so what are you going to say to your donors? Offer a clear description but don’t get bogged down in detailed explanations or the math. Use an analogy to help shift the perspective and then pivot to the opportunity to give.

Here are some suggested talking points:

1. Explaining the 0.5% floor:

The goal is to simplify the math, so it doesn’t sound discouraging.

• Perspective shift – insurance deductible analogy:

“Think of the new 0.5% rule like your health insurance. You have a small deductible to meet at the start of the year – roughly $500 for every $100,000 of income. Once your giving clears that hurdle, your deductions kick in as usual. Since your generosity usually far exceeds that amount, the impact on your giving is actually quite small.”

• Pivot – opportunity to “go big”:

“This new rule actually discourages small, scattered giving and benefits donors like you who make fewer, larger impact gifts. It’s a great reason to bundle your smaller annual checks into one significant gift to clear that threshold early.”

2. Addressing the 35% ceiling:

The goal is to minimize the perceived loss of the 2% difference.

• Perspective shift – it’s only 2¢:

“While it’s true the tax value of itemized deductions is dropping from 37% to 35%, it’s important to remember that’s a difference of only 2¢ for each dollar you give. Your after-tax cost of giving is still only 65¢ cents on the dollar and your tax savings is subsidizing the rest. And, most importantly, your impact on our mission remains 100% whole.”

• Pivot – appreciated asset counter-move:

“If you are concerned about the small loss of tax efficiency, let’s look at donating appreciated stock instead of cash. You still avoid 100% of the capital gains tax (which could be as much as 20% plus the 3.8% surcharge). When you combine that tax avoidance with the 35% income tax deduction, it’s still incredibly favorable to you.”

3. Turning non-itemizer deduction into increased giving:

The goal is to encourage increased giving instead of merely taking advantage of new tax savings.

• Perspective shift – you can have even more impact:

“The deduction for non-itemizers is a wonderful way to leverage your gift and provide even more help for those we serve. With your generous support, we can change lives every day.”

• The pivot – charitable bequest opportunity:

“Over the years we have come to count on your generosity. I’d like to talk to you about how a gift from your estate – a charitable bequest or beneficiary designation – can make sure your impact continues forever.”

What’s Next?

Tax law changes can give donors pause as they assess the personal impact. The key is to remind donors of their impact on your mission. Congress can make changes to tax law any time it musters a majority in both chambers. Although the One Big Beautiful Bill Act may have seemed earth shaking, it was mostly an extension of provisions adopted in 2017 that were about to expire. Typically, major tax law changes happen only every 10 to 15 years, which suggests we should be good for another few years … but who knows?