By The Community Foundation San Luis Obispo County
October 2025
With the federal “ One Big Beautiful Bill” set to reshape the tax landscape in 2026, this year presents a unique opportunity for donors to maximize their charitable impact. The coming changes, while aimed at simplifying the tax code, are expected to reduce or limit the deductions many donors currently enjoy.
That means gifts made before December 31, 2025, could go further, provide stronger tax benefits, and give you more control over how and when your philanthropy supports the causes you care about.
What’s Changing Next Year
While details are still being finalized, several key provisions in the new legislation will likely reduce the tax efficiency of charitable giving for many households:
- A new 0.5% floor on charitable deductions: only donations above 0.5% of adjusted gross income (AGI) will be deductible.
- Deduction caps for high earners, limiting the value of charitable write-offs to roughly 35¢ on the dollar.
- A larger standard deduction that could make itemizing and therefore deducting gifts less common for many families.
In short, next year’s gifts may not stretch as far from a tax perspective.
Why Giving Now Matters
Here’s why your 2025 giving can make a bigger difference for both you and the community.
- Lock In Today’s Friendlier Tax Rules
Right now, your charitable deduction is still fully available up to 60% of your AGI for cash gifts. Next year, those limits tighten. Giving now lets you maximize today’s deduction rules while they last.
- Reduce Taxes While Supporting What You Love
If you’re facing a higher-income year, maybe from a business sale, bonus, or required IRA distribution, charitable contributions this year can help offset taxable income while fueling local impact across San Luis Obispo County.
- Bundle Gifts for Greater Impact
The new “floor” means smaller annual gifts may no longer qualify for a deduction next year. Consider “bunching” several years’ worth of giving into one larger 2025 gift — either directly to a fund or into a Donor-Advised Fund (DAF) at The Community Foundation.
You’ll get the full deduction this year and can recommend grants to your favorite nonprofits over time.
- Simplify Future Giving
By giving now, you can lock in the deduction and avoid the uncertainty of new tax interpretations coming in 2026. Plus, you’ll have your giving dollars ready to deploy exactly when local needs arise.
Real Impact, Close to Home
Every dollar given through The Community Foundation supports programs that strengthen San Luis Obispo County, from housing and childcare to mental health and the arts.
Whether you give to an existing fund or start your own, your generosity fuels local resilience and keeps vital programs running strong, especially as public funding continues to shrink.
Ways to Act Before Year-End
- Make a qualified charitable distribution (QCD) directly from your IRA if you’re 70½ or older; it counts toward your required minimum distribution and isn’t taxable.
- Give appreciated stock or real estate to avoid capital gains and increase your deduction.
- Open or add to a Donor-Advised Fund (DAF) to lock in the deduction now and grant later.
- Support Together for SLO County: A Critical Response Fund — your 2025 gift will help sustain essential services like housing, childcare, and healthcare right now while allowing you to capture the most favorable charitable tax benefits before next year’s law changes.
Don’t Wait: The Window Closes December 31
When the One Big Beautiful Bill goes into effect, many of these benefits will change. Giving before year-end lets you maximize your charitable impact and your tax efficiency — a true win-win for you and your community.
“Smart, early giving lets donors secure today’s advantages while supporting tomorrow’s needs,” says Christine Dawson, CEO of The Community Foundation San Luis Obispo County. “Every gift made now ensures that our region’s nonprofits can keep serving those who rely on them most.”
Here’s an example from long-time Arroyo Grande residents Tom and Elena demonstrating the benefits of giving in 2025 vs. 2026.
Each year, Tom and Elena typically give about $50,000 to causes they love, primarily supporting housing and childcare initiatives. Their advisor helped them model what would happen if they gave this year (2025) versus next year (2026).
Scenario 1: Giving in 2025 (Before the One Big Beautiful Bill)
- Gift Amount: $50,000
- Top Federal Tax Bracket: 37%
- Deduction Allowed: Full 100% of gift (up to 60% of AGI for cash)
- Tax Savings: $18,500
- Net Cost of Gift (after tax savings): $31,500
- Community Benefit: Immediate funding for childcare and mental health programs through Together for SLO County: A Critical Response Fund
“We saw our gift go right to work this year,” said Elena. “And we kept more in tax savings than we would next year. It’s a win-win.”
Scenario 2: Waiting Until 2026 (After the One Big Beautiful Bill)
- Gift Amount: $50,000
- New 0.5% floor on deductions means part of their gift doesn’t qualify.
- High-income deduction cap: only 35¢ of tax benefit per dollar.
- Effective Deduction Value: $17,500
- Tax Savings: $17,500 × 35% = $6,125
- Net Cost of Gift: $43,875
- Community Impact: Delayed; nonprofits face deeper cuts before funding arrives.
“If we’d waited, we would’ve lost over $12,000 in tax benefit and the nonprofits we care about would have waited, too,” said Tom.
The Bottom Line
By giving in 2025, Elena and Tom:
- Saved roughly $12,000 more in taxes than if they had waited.
- Provided immediate help for housing, childcare, and healthcare programs under strain.
- Locked in today’s favorable rules before new limits take effect in 2026.
“We didn’t want to miss the chance to make a bigger impact both for our community and for our family’s finances,” Tom said. “It feels good to know we acted while it mattered most.”
Contact The Community Foundation team to learn more at 805-543-2323 or donorservices@cfsloco.org.
