Real, or make believe? Dispelling One Big Beautiful Bill Act (OBBBA) myths 

For most attorneys, CPAs, and financial advisors, the fourth quarter is an important time to check in with clients on their year-end goals. December 31 is in sight, but it’s not yet crunch time. What should you be addressing with your clients right now during this important window for planning related to charitable giving?  

Before you dive deep into any particular planning strategy, it might be useful to address, head on, major areas of confusion for your clients. To that end, Innovia’s team recommends dispelling three big myths that are swirling around about charitable giving under the new laws.  

Myth: The OBBBA changed the rules for QCDs 

Reality: The rules did not change, and changes to other rules actually make QCDs better 

We’ve fielded a lot of questions about Qualified Charitable Distributions and how these vehicles are affected by the OBBBAt. Nothing changed within the QCD rules themselves. That said, as a recent Wall Street Journal article points out, new tax provisions—such as an expanded itemized deduction for seniors and improved state and local tax deductions—could indirectly make QCDs even more advantageous for older IRA owners by reducing their taxable income and helping avoid higher Medicare premiums.  

Myth: The new “floor” for charitable deductions taking effect in 2026 applies only to corporate giving 

Reality: The OBBBA includes both a “floor” and a “cap” for charitable deductions beginning in 2026 

The OBBBA introduced new limits on charitable deductions for both corporations and individuals. We appreciate how this article describes that the One Big Beautiful Bill Act (OBBBA) introduces new limits on charitable deductions—for example, donors who itemize must now exceed a floor of 0.5% of adjusted gross income before any deduction applies, and high-income filers will see their marginal deduction rate for donations drop from 37% to 35%. Separately, the OBBBA sets a new floor for corporate charitable tax deductions at 1% of taxable income, meaning corporations can only deduct charitable gifts above that threshold. Under prior law, corporations could deduct charitable contributions up to a cap (generally 10% of taxable income)–which is still in place after the OBBBA–without any minimum floor.  

Myth: The new “above-the-line” deduction for non-itemizers is going to make things so much easier. 

Reality: This new rule is more complicated than it looks. 

Under the OBBBA, starting in 2026, taxpayers who do not itemize deductions can take an “above-the-line” deduction for cash gifts to charities—$1,000 for individuals or $2,000 for married couples. Sounds great, yes? Not so fast. Gifts to donor-advised funds and private foundations do not count. Neither do gifts of noncash assets, such as appreciated stock. Both of these limitations may very well be in direct conflict with the advice you usually give your clients about the benefits of appreciated stock gifts over gifts of cash, and the benefits of organizing giving through a donor-advised fund at Innovia. Still, the new deduction for non-itemizers is still a perk, especially for younger people who may not yet itemize their deductions and would like to step up their community involvement through charitable giving.  

As always, when you and your clients encounter legal changes that don’t completely make sense to you, please reach out. We are happy to point you in the direction of helpful technical articles, as well as offer tools and services to meet your clients’ charitable giving needs even during this time of shifting laws and general uncertainty.