The One Big Beautiful Bill Act (OBBBA) brings several changes for nonprofits — some challenging, others full of promise. One provision, in particular, stands out as a potential game changer for fundraising and donor engagement: the return of the charitable deduction for non-itemizing taxpayers.
During the COVID-19 pandemic, Congress passed a temporary provision to help boost charitable donations to hard-hit nonprofits. It allowed individual taxpayers to deduct donations up to $300 and married couples to deduct up to $600, even if they didn’t itemize deductions. That provision expired after 2020, but a new and improved provision included in the OBBBA could bring a healthy influx of new and re-engaged donors.
Small change to big opportunity
Beginning in 2026, taxpayers who take the standard deduction will once again be able to deduct cash donations to qualified charities. This time, the deduction is for up to $1,000 for individuals or $2,000 for joint filers. Donations to donor-advised funds and private foundations are excluded. But even with these limits, the impact could be significant.
This is because typically nearly 90% of U.S. taxpayers take the standard deduction, which means they’ve had no direct tax incentive to give since the previous provision expired. Restoring this benefit could reignite giving among everyday donors, many of whom make up the heart of nonprofit support. For nonprofits, it’s a clear opportunity to craft campaigns that emphasize not only that every gift counts, but that every gift also can count toward a tax benefit. For younger taxpayers who may have a passion for your mission, this could be the first time they’ve connected that passion with a chance to save taxes.
Your nonprofit can prepare now to capitalize on the new deduction and deepen donor engagement beyond a single donation. Toward that end, reach out early to nonitemizers and young donors who may be unfamiliar with charitable tax benefits. Educate supporters through clear, accessible messaging that connects people’s personal values to tangible impact. This is likely to encourage ongoing involvement, whether through volunteering, advocacy or sustained giving, thus deepening engagement beyond a single donation.
From policy to possibilities
The new OBBBA deduction may appear modest, but its potential to spark renewed broad-based participation among millions of small donors is powerful. By focusing on transparency, donor education and authentic connection, nonprofits can turn this policy update into an enduring opportunity to expand their donor base and strengthen community generosity for years to come. For more on the OBBB and the tax implications for nonprofits, reach out to your Hood & Strong team.
