How 2025 Tax Reform Could Impact Philanthropy Going Forward

Tax policy can have a profound effect upon the ways that people choose to give. In July 2025, tax reform legislation introduced new guidelines that could influence how individual donors and corporations approach philanthropy in coming years. Fortunately, when nonprofits understand the environment they’ll be fundraising within, they can plan accordingly. 

Formally titled 2025 H.R.1, the tax reform legislation introduced a series of adjustments set to take effect in 2026. Among the most notable: 

• Expanded deductions for non-itemizers, allowing up to $1,000 ($2,000 for joint filers), which could encourage broader participation in giving. 

• A new floor for itemizers, limiting deductions to cash contributions exceeding 0.5% of adjusted gross income (AGI). 

• A 35% cap on charitable deduction benefits for high-income donors, down from 37%. 

• A 1% minimum giving threshold for corporations, now required to contribute at least that share of taxable income to qualify for a deduction. 

• Reductions to several federal funding streams, including the termination of more than 15,000 grants and notable decreases in Medicaid and SNAP budgets. 

WHAT THESE CHANGES MEAN FOR NONPROFITS 

Analysis by the Lilly Family School of Philanthropy suggests that these shifts could result in a $4.1-$8.2 billion decline in giving from high-income households over the next decade and a $4.5 billion annual reduction in corporate philanthropy. Yet these projections also reveal where nonprofits can focus: expanding donor bases, reinforcing mission value, and planning for more diversified revenue strategies. 

 “This is a time to rethink and reengage, not withdraw,” says Meghan Davison, Executive Vice President at CCS. “When policy changes, it creates new pathways for generosity. Nonprofits are well positioned to help donors find them.”  

In periods of adjustment, leadership and logistics both matter. The coming years present an opportunity to test new engagement strategies and align giving conversations with the values and priorities that continue to motivate philanthropy at every level. 

 “Periods of transition naturally invite innovation,” Davison says. “We’re optimistic that with focus and creativity, nonprofit leaders can ensure that the next chapter of philanthropy remains one of purpose and progress.” 

Steps Nonprofit Leaders Can Take Now 

• Engage broad-based donors who may now have greater incentive to give. 

• Communicate timing considerations to major donors who may accelerate contributions. 

• Plan around emerging “peak giving years,” as bunching strategies, in which donors combine multiple years of charitable contributions into a single tax year to maximize itemized deductions, evolve. 

• Educate boards and staff on how the new rules may affect both fundraising and budgeting. 

• Develop a variety of revenue scenarios to prepare for potential fluctuations in federal support. 

Understanding these shifts can feel complex, especially as nonprofits navigate 2026 and beyond. To support that planning, CCS created a guide that outlines the key changes in 2025 H.R. 1 and what they may mean for charitable organizations. Yet even as the rules shift, the most enduring driver of philanthropy is something nonprofits already shape every day. 

 “Mission and impact drive generosity far more than tax policy,” Davison notes. “Being proactive in communication and highly focused on mission and impact will inspire donors, even in this time of change.” 

“This isn’t just a tax conversation,” she adds. “It’s a stewardship opportunity. Nonprofits that position themselves as trusted advisors in a changing landscape and offer clarity on tax-efficient giving will stand out in a competitive philanthropic market.”