End-of-Year Charitable Giving and Tax Strategy Under the One Big Beautiful Bill Act: Optimizing Wealth Management

As the 2025 tax year draws to a close, high-net-worth individuals and wealth managers are recalibrating their charitable giving strategies to align with the transformative provisions of the (OBBBA). This legislation, enacted in 2025, introduces sweeping changes to tax deductions for charitable contributions, reshaping the landscape of wealth management and philanthropy. By understanding these shifts and leveraging strategic tools like (DAFs) and appreciated asset donations, investors can maximize tax efficiency while advancing their philanthropic goals.

Key Provisions of the OBBBA Affecting Charitable Giving

The OBBBA introduces several critical changes to charitable deductions, particularly for seniors and high-income taxpayers. , , though it phases out for higher earners and expires by 2028. While this provision does not eliminate taxes on Social Security benefits, it offers a targeted relief mechanism for seniors.

For charitable contributions, starting in 2026. For example, . Additionally, means only contributions exceeding this threshold are deductible. This change disproportionately impacts high-income individuals, .

Non-itemizers, , now benefit from for cash gifts to public charities, starting in 2026. However, this provision excludes DAF contributions and is subject to inflation adjustments.

Strategic Implications for Wealth Management

The OBBBA's changes necessitate proactive planning to optimize tax benefits. For affluent itemizers, . For instance, after accounting for both limitations. To mitigate this, wealth managers recommend -concentrating multiple years' worth of donations into a single year via DAFs-to clear the new deduction floor.

Ultra-high-net-worth individuals are advised to before 2026 to lock in the full 37% tax benefit. For example, , .

Non-itemizers, meanwhile, . However, DAF contributions remain ineligible for this benefit, underscoring the importance of direct cash donations to public charities.

Case Studies: Real-World Applications

1. : A couple with $800,000 AGI and annual charitable intent of $15,000 could bunch five years' worth of donations ($75,000) into a single year via a DAF. This allows them to , .

2. , . Post-2026, .

3. : A family with a private foundation integrated charitable trusts into their estate plan, allowing them to donate appreciated assets (e.g., stocks) while avoiding capital gains taxes. This strategy also enabled them to .

Conclusion: Proactive Planning is Essential

The OBBBA's provisions demand a nuanced approach to charitable giving. By front-loading contributions, bunching gifts via DAFs, and integrating estate planning tools, investors can navigate the new tax landscape effectively. As the 2025 tax year concludes, wealth managers and high-net-worth individuals must act swiftly to capitalize on the remaining opportunities under the OBBBA's temporary rules.