How Changes in Tax Law Could Impact Your Charitable Tax Benefits

The following is a reprint of the JCF's Money Matters column, published in the September 3, 2025 issue of the Jewish Community Voice, titled, "How changes in tax law could impact your charitable tax benefits":

If you give charitably to enhance Jewish South Jersey, THANK YOU!

As a donor, perhaps you’ve heard about the “One Big Beautiful Bill Act” (“OBBBA”), which was signed into law in July. The OBBBA covers a lot of ground, so let’s dive in and demystify tax law changes that could impact your charitable tax benefits.

As some background, the OBBBA extends the 2017 Tax Cuts and Jobs Act (TCJA) tax cuts and makes numerous other notable tax law changes. Some of the provisions are effective for the current tax year and are made permanent. Others have different effective dates and are temporary (expiring in 2028 or later).

What follows are highlights of a recently-released recap of the OBBBA provided by the Jewish Federations of North America (JFNA), edited for conciseness (visit jcfsnj.org/blog for an extended version):

• Tax Rates & Standard Deduction: OBBA makes the TCJA tax rates permanent, indexes the tax bracket amounts to inflation starting in 2026, and makes the increases in the standard deduction permanent as well. For 2025, the standard deduction will be $15,750 for single taxpayers and $31,500 for those married filing jointly.

• State and Local Tax (SALT) Deduction: OBBA temporarily increases the limit on the federal state and local tax deduction starting in 2025 to $40,000 (indexed for inflation) until 2030. The amount of the deduction is phased down for those with adjusted gross income (AGI) over $500,000.

• [Observation: The increase in the SALT deduction limitation may cause you to find it advantageous to itemize your deductions. This, in turn, may cause you to claim the charitable contribution deduction on your tax return, which you likely have not done in many years (only 7.5% of taxpayers did so last year). This is especially true if you live in a state with high income tax including New Jersey. Note that there will be a floor on itemized charitable contributions starting in 2026 which is discussed below.]

• Floors and Ceilings: OBBBA reduces the value of all itemized deductions to 35 percent (rather than the top tax rate of 37 percent.) In addition, it imposes a floor of 0.5 percent of AGI on the itemized deduction for charitable contributions. These provisions are effective for tax years starting in 2026.

• [Observation: As an example, if an individual’s AGI is $800,000, the first 0.5 percent– or $4,000–of charitable contributions would not be deductible. In addition, the value of the individual’s total itemized deductions would reduce taxes by no more than 35 percent because AGI exceeds the start of the 37 percent tax bracket.]

• [Observation: If you are considering making major gifts (such as six-figure gifts) consider finalizing such contributions before year-end when the floor and ceiling take effect in 2026. Similarly, if you are considering making major planned giving contributions, such as substantial funding to or establishing a donor-advised fund or endowment fund with the JCF, you may find it advantageous to consider making the gift before December 31, 2025.]

• Nonitemizer Charitable Contribution Deduction: OBBBA creates a charitable contribution deduction for cash contributions for donors who do not itemize deductions ($1,000 single/$2,000 married filing jointly) starting in 2026.

• [Observation: This permanent “universal” or “above-the-line” charitable deduction provides a significant giving incentive to the over 90 percent of taxpayers who do not itemize their deductions.

Questions about charitable giving? Please contact JCF Executive Director David Snyder at (856) 673-2571 or dsnyder@jfedsnj.org to discuss your philanthropic goals, such as creating an endowment fund or donor advised fund. Your generosity benefits our vibrant Jewish community.

[The JCF does not provide financial, legal, or tax advice; contact your trusted advisor to determine any potential outcomes of your giving.)