Signed into law in July 2025, the One Big Beautiful Bill Act (OBBBA) is one of the most sweeping tax updates in years. It touches everything from deductions to philanthropy to estate planning. The important question is: what does it mean for you and your financial plan?
Here’s a breakdown of the updates that matter most — and the strategies you can use to stay tax-efficient while still supporting the causes you care about.
Key OBBBA Changes to Know
1. Electric Vehicle Tax Credits Ending
The federal EV tax credit ends after September 30, 2025. If you’ve been considering an electric vehicle, you’ll need to purchase and take delivery before then to claim the credit.
2. State and Local Tax (SALT) Deduction Expanded
The cap on state and local tax deductions rises from $10,000 to $40,000 (through 2029). This is especially meaningful for households in higher-tax states such as Massachusetts, New York, and California. The benefit does begin to phase out at higher income levels.
3. Estate and Gift Tax Exemption Increased
Starting in 2026, the federal estate and gift tax exemption increases to $15M per person ($30M per couple). This means fewer families will owe federal estate taxes.
That said, it makes basis planning even more important. Assets passed at death typically receive a “step-up in basis,” which can reduce future capital gains for heirs. For example, if you purchased Apple stock decades ago at $50/share and it’s now worth $200/share, your heirs would inherit the stock at $200/share — saving them significant taxes later.
4. 2017 Tax Cuts Made Permanent
The lower tax brackets, higher standard deduction, and Qualified Business Income (QBI) deduction from the 2017 Tax Cuts and Jobs Act are now permanent.
5. Expanded Family Benefits
- Child Tax Credit increased to $2,200 per child (adjusted for inflation beginning in 2026).
- Seniors receive an additional $6,000 deduction (subject to income limits).
- Interest on personal car loans is deductible from 2025–2028 (subject to income phaseouts).
OBBBA and Charitable Giving
For many families, the most noticeable changes relate to charitable giving.
Higher Standard Deduction (2025)
- $15,750 for single filers
- $31,500 for married couples
Because fewer people will itemize, smaller annual charitable donations may no longer create a tax deduction.
Strategy:Use a charitable bunching strategy — make larger contributions in certain years to exceed the standard deduction and itemize, then take the standard deduction in other years.
New “Above-the-Line” Deduction (2026)
Everyone will be able to deduct up to $1,000 (single) or $2,000 (married) in cash gifts to public charities, even if they don’t itemize.
Note: This does not apply to Donor-Advised Funds or private foundations.
New 0.5% AGI Floor on Deductions (2026)
If you itemize, charitable contributions must now exceed 0.5% of your adjusted gross income (AGI) to qualify for a deduction.
Example: If your AGI is $400,000, the first $2,000 you give each year won’t count toward deductions. Only donations above that amount are deductible.
This makes Donor-Advised Funds (DAFs) especially useful. You can contribute a larger amount in one year, take the deduction, and then distribute funds to charities over time.
High-Income Deduction Cap (2026)
For those in the top tax bracket, the benefit of charitable deductions will be capped at the 35% rate.
Strategies to Maximize Your Giving Under OBBBA
- Plan Ahead –The days of making quick year-end decisions are over. With new rules, timing matters more than ever.
- Use Bunching – Instead of giving $10,000 each year, consider giving $30,000 every three years. In bunch years, you’ll itemize; in off years, you’ll take the standard deduction.
- Leverage Donor-Advised Funds – Contribute in years with higher income, take the deduction upfront, and spread out gifts to charities over time.
- Review Your Trust Documents – Make sure your trust allows for charitable gifts. This can simplify giving and create additional tax benefits.
The Bottom Line
The OBBBA doesn’t eliminate the benefits of charitable giving — it simply changes the rules. With the right strategy, you can still reduce taxes, support the organizations you care about, and create a meaningful impact for your family and community.
At SMB Financial Strategies, we work with clients to design tax-smart giving strategies that align with their goals. From timing donations to using Donor-Advised Funds or reviewing trust documents, we’ll help you make the most of the new rules.