If you give to charity, the 2025 tax year brings a few important updates. Below is a plain-English
guide to what changed, who’s affected, and what to do to make sure your donations count at tax
time.
What changed for individuals
• A small “floor” now applies before you can deduct charitable contributions. For 2025 and
after, you can only deduct charitable gifts to the extent your total gifts exceed 0.5% of
your contribution base (generally adjusted gross income). This new floor changes the
order in which your gifts are applied across the usual percentage limits. If your total
giving is modest relative to your income, this floor can limit the deduction for small
amounts of charitable giving. Check the current IRS instructions for how this interacts
with the 50%/60% and 30%/20% limits and carryovers; the new floor is in IRC §
170(b)(1)(I) IRC § 170(b)(1)(I) as added by OBBBA, with carryover coordination in §
170(d)(1)(C) (2025 rules) OBBBA Merged Changes; IRC § 170.
• Carryovers are adjusted for amounts disallowed by that new 0.5% floor. If the floor
blocks part of your 2025 deduction, the rules now tell you how to add that disallowed
amount to the excess you carry forward (subject to the usual up-to-5-year carryover
windows and percentage caps). See § 170(d)(1)(C) for individuals (2025 rules) OBBBA
Merged Changes; IRC § 170.
• The familiar percentage caps still apply. Contributions are still subject to the statutory
percentage limits by type of gift and recipient (for example, cash gifts to most public
charities are generally subject to a higher limit than gifts of appreciated property, and
gifts to certain private foundations have lower limits). For the exact limits applicable to
your situation, review current IRS guidance and your Form 1040 instructions; see §
170(b)(1) and § 170(e) for the core framework IRC § 170.
What changed for corporations
• Corporate charitable deductions now have a 1% “floor” and the familiar 10% “ceiling.”
For 2025, a C-corporation’s total charitable contributions are allowed only to the extent
they exceed 1% of taxable income, and they cannot exceed 10% of taxable income.
Taxable income for this test is computed with the same adjustments as before (e.g.,
without the charitable deduction itself, certain special deductions, and carrybacks). See
updated § 170(b)(2)(A) and § 170(b)(2)(D) (2025 rules) OBBBA Merged Changes; IRC
§ 170.
• Corporate carryforwards continue, with coordination rules expanded. Unused
contributions can still be carried forward up to five years, and the new rules clarify how
amounts disallowed by the 1% floor can be carried only from years in which the 10% cap
would otherwise be exceeded. See § 170(d)(2)(A)–(D) (2025 rules) OBBBA Merged
Changes; IRC § 170. The longstanding regulation on corporate carryovers remains
relevant for compute-order and NOL coordination Treas. Reg. § 1.170A-11.
Donor-advised funds and special gifts
• Donor-advised funds still require a specific acknowledgment and control rules. Your
deduction for contributions to a donor-advised fund (DAF) is allowed only if the
sponsoring organization meets certain criteria and you receive a contemporaneous written
acknowledgment confirming the sponsoring organization has exclusive legal control over
the assets. See § 170(f)(18) for the income tax rule (DAFs) IRC § 170.
• Private foundations, conservation easements, and other special property gifts continue to
have additional limitations and documentation requirements. Be mindful of the special
percentage caps and any basis-reduction rules for certain property (e.g., tangible personal
property not used for the charity’s exempt purpose) IRC § 170.
Documentation and substantiation (no changes, but still critical)
• Cash gifts: Keep a bank record (canceled check, bank statement) or a written
acknowledgment from the charity showing its name, the date, and the amount. If any
single contribution is $250 or more, you must have a contemporaneous written
acknowledgment with specific language about goods/services provided, if any Treas.
Reg. § 1.170A-15; IRC § 170.
• Noncash gifts: For noncash contributions over $500, attach Form 8283 with required
details. For gifts over $5,000, obtain a qualified appraisal and complete Section B of
Form 8283 (some exceptions apply, e.g., publicly traded securities). For gifts over
$500,000, attach the qualified appraisal to your return. Keep the charity’s receipt and the
contemporaneous acknowledgment for gifts of $250 or more Treas. Reg. § 1.170A-16.
• Percentage limits and carryovers: If you carry over amounts from prior years or have
multiple gift types, be sure your records show how you applied the ordering rules and
limits (the IRS regulations explain ordering and the 5-year carryover for individuals)
Treas. Reg. § 1.170A-8; Treas. Reg. § 1.170A-10.
Common scenarios
• Cash donations to a public charity: You’ll need a bank record or charity
acknowledgment. Your deduction is still subject to the usual cash contribution percentage
cap, and now the 0.5% floor applies first. If your total giving is small, the floor could
prevent deducting some or all cash gifts; if your giving is large relative to income, you
may still be limited by the percentage cap. Check current IRS instructions for the exact
cash cap applicable in 2025 IRC § 170; OBBBA Merged Changes.
• Noncash donations (e.g., clothing, household items): Ensure items are in good condition;
keep a receipt listing what you donated. If your total noncash gifts exceed $500, file
Form 8283 Section A; over $5,000 generally requires a qualified appraisal and Form
8283 Section B. Apply the 0.5% floor first and then the usual percentage caps and any
basis reduction rules Treas. Reg. § 1.170A-16; IRC § 170.
• Donor-advised fund: Make sure you receive the correct acknowledgment from the
sponsoring organization stating it has exclusive legal control over the assets; without it,
the deduction can be disallowed. Your DAF gift still counts toward the new 0.5% floor
and is subject to applicable percentage caps IRC § 170.
• Corporate donations (C-corps): Your 2025 charitable deduction applies only to the extent
total contributions exceed 1% of taxable income, and may not exceed 10% of taxable
income. Unused amounts may carry forward up to five years under the updated rules.
Keep board resolutions and substantiation, as required for accrual-basis elections and
documentation OBBBA Merged Changes; IRC § 170; Treas. Reg. § 1.170A-11.
What to do now
• Plan your giving with the new floor in mind. If your total gifts are typically small,
consider whether bunching contributions into one year helps you clear the 0.5% floor and
maximize your deduction (and monitor the usual percentage caps) OBBBA Merged
Changes; IRC § 170.
• Keep thorough records. Save bank records, charity acknowledgments, receipts, and—if
applicable—qualified appraisals and completed Form 8283. The substantiation
requirements haven’t changed, but they remain the key to securing your deduction Treas.
Reg. § 1.170A-15; Treas. Reg. § 1.170A-16.
• Verify limits and do the math. Percentage caps, ordering rules, and carryovers can be
complex—especially with the new floor. Review current IRS instructions and consider
working with a tax professional to apply the rules to your exact situation for 2025 IRC §
170; OBBBA Merged Changes.
The bottom line: OBBBA adds a small “floor” for individuals and a 1% floor for corporations,
while keeping the familiar percentage limits, substantiation rules, and carryover framework.
With a little planning and good documentation, you can make sure your gifts are both generous
and tax-smart in 2025.