Tax Law Changes and Business Giving
The One Big Beautiful Bill Act and what’s at stake for charitable giving and communities.
In 2025, Congress enacted multiple changes to the tax treatment of charitable donations as part of the One Big Beautiful Bill Act (OBBBA). With many taxpayers still learning about and preparing to make adjustments based on the new tax law, its ultimate impact is still to be determined. However, many business leaders have shared concern about future, downward pressure on community donations.
The Issue
Like any major tax and budget law, OBBBA will have far-reaching implications for households, businesses, government programs, and the economy as a whole. With multiple changes to the tax treatment of charitable donations, it will also impact charitable giving by businesses in various ways. If giving by businesses declines, this could be felt especially strongly by those that do not have a deep relationship with private philanthropy. This could result in diminished support for small business loan initiatives, community college trainings, parades, youth sports leagues, and other community activities often supported by business giving.
OBBBA Changes to Charitable Giving
While any bill as large as OBBBA will impact charitable giving indirectly by reshaping economic activity and government spending, there are 4 primary provisions that go into effect in 2026 and will directly impact the treatment of charitable donations.
- Corporate Giving Floor – Corporations can no longer deduct the first 1% of taxable income that is donated to charity. Estimated lost giving: $1.6 – $4.5 billion per year.
- Individual Giving Floor – Taxpayers who itemize their deductions can no longer deduct the first .5% of Adjusted Gross Income (AGI) that they donate to charity. This would impact owners of many small pass-through businesses — like LLCs and S-corporations —whose profits and charitable giving are subject to the individual income tax. Estimated lost giving: $2.4 billion per year.
- Limit on Itemized Deductions – The value of all itemized deductions, including the charitable deduction, is reduced for households whose income generally puts them in the highest tax bracket. This applies whether those earnings are wages or the proceeds of a pass-through business. Estimated lost giving: $4.1-$6.1 billion per year.
- Nonitemizer Charitable Deduction – Taxpayers who do not itemize and instead claim the standard deduction can claim an additional deduction for charitable donations. This deduction is capped at $1,000 for individuals and $2,000 for couples. Estimated increased giving: $4.4 billion per year.
For deeper explanation of these provisions, examples, and links to associated research, see Independent Sector’s Potential for Changing Business Giving Patterns from Recent Tax Law Changes white paper.
Get Engaged
While comprehensive and conclusive data on changes in giving patterns, driven by changes contained in OBBBA, will take time to gather, there are key ways for business leaders, associations, business leagues, and nonprofits to engage:
- Share this page and our 1-minute video overview with your membership and other community organizations.
- Begin tracking impact and collecting stories of how these changes are affecting your community, including on your organization, on small businesses, and on local nonprofits.
- Contact Independent Sector to share what you are learning, ask questions, and engage with policymakers to protect charitable giving from businesses of all sizes.
