One, Big, Beautiful Bill: Impact on Philanthropy

Last updated: July 8, 2025.

H.R.1 is now federal law; here's the final bill text. 

With many of the provisions in the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97) expiring at the end of 2025, the 119th Congress passed legislation through the reconciliation process that extends several TCJA provisions and includes many of the Republican majority's priorities. Read more about the budget reconciliation process.

Here's how it happened:

On Monday, May 12, the House Committee on Ways and Means released the Amendment in the Nature of a Substitute, which contains key tax provisions. The Committee marked up the legislation on May 13 and approved it on party lines on May 14 with no amendments. On May 19, the House Committee on Rules released amended text, and on May 22, the House passed the bill.

On June 16, the Senate Finance Committee released text of the tax provisions of the larger budget reconciliation package, and on June 28, the Senate Budget Committee released amended text for the full budget reconciliation bill. The Senate passed the bill on July 1, with three Republicans voting against and Vice President J.D. Vance breaking the 50-50 tie. The House then passed the legislation without changes, and President Trump signed it into law on July 4.

The Joint Committee on Taxation (JCT) released estimates of the budgetary effects of the House legislation as well as estimates of the budgetary impact of the Senate bill. Note that JCT's estimates for some Senate provisions are significantly different from their estimates for the House versions; this is for a variety of reasons, most importantly that the Senate uses a current policy baseline while the House uses a current law baseline. Read more about what that means and why it matters. 

Below, find our summary of the provisions impacting philanthropy. We will continue to update this page as we learn more about provisions that impact the sector. Join our Public Policy Action Network and sign up for Washington Snapshot to receive regular policy updates and stay engaged.

Additional resources on the 2025 Budget Reconciliation bill:

Private Foundations

Corporate Grantmakers

Individual Giving Incentives

All 501(c)3 Organizations, Including Foundations and Nonprofits

Other Provisions of Note

Private foundations

Excise tax on net investment income

  • What the President signed into law: The final bill did not include a House-passed provision to increase the excise tax. 

Excess business holdings of private foundations

  • What the President signed into law: The final bill did not include a House-passed provision that would have amended excess business holdings of private foundations.

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Corporate grantmakers

Floor on charitable contributions from corporations

  • What the President signed into law: Section 70426 creates a 1% floor, meaning corporations would have to contribute at least 1% of their taxable income in order to qualify for a charitable tax deduction. The provision does not change the 10% ceiling. The provision also allows for up to a five-year carryforward of contributions in excess of 10%. It is unclear whether corporations would be able to deduct the full value of their charitable contributions or only the value in excess of 1%. We hope for more clarity as the provision is implemented.
  • Estimated cost: JCT estimates this provision will generate $16.6 billion over 10 years.
  • Impact on philanthropy: The Council joined our infrastructure partners and more than 2,300 charitable nonprofits in asking the Senate to remove this provision. Research commissioned by Independent Sector estimates average annual reduction in corporate charitable giving to be approximately $4.5 billion. 

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Individual giving

Changes to charitable deduction for itemizers

  • What the President signed into law: 
    • Section 70111 caps the tax benefit at $0.35 for each dollar of itemized deductions rather than the full $0.37 per dollar previously received by taxpayers in the top tax bracket.
    • Section 70425 would create a 0.5% floor on charitable contributions for itemizers, meaning individuals who itemize would only earn a charitable deduction for giving in excess of 0.5% of their charitable contribution base (i.e., their adjusted gross income [AGI] calculated without taking into account any charitable giving).
    • Section 70425 would also make permanent the TCJA’s increased contribution limit of 60% of AGI for cash gifts made to qualified charities for taxpayers who elect to itemize. 
  • Estimated cost: JCT estimates the final provision limiting the tax benefit of itemized deductions will generate $34.4 billion over ten years relative to current policy and cost $255.5 billion relative to current law; however, note that this estimate includes all itemized deductions, not just the charitable deduction. JCT estimates the combined impact of the 0.5% floor and permanent 60% contribution limit will generate $64.9 billion over ten years scored according to the current policy baseline and $63.1 billion according to the current law baseline. 
  • Impact on philanthropy: Any limits to the charitable deduction negatively impact nonprofits, which rely on the generosity of everyday Americans. Making permanent the expanded charitable deduction for itemizers would continue to incentivize charitable giving at a time when nonprofits are in critical need. 

Charitable deduction for nonitemizers

  • What the President signed into law: For tax years beginning after December 31, 2025, Section 70424 creates a permanent deduction for taxpayers who do not itemize, capped at $1,000 ($2,000 for joint filers). This does not include contributions to donor-advised funds.
  • Estimated cost: JCT estimates the final provision will cost $73.75 billion over 10 years under both scoring methods.
  • Impact on philanthropy: The Council supports this provision, which would recognize a broader swath of Americans for their giving.

Standard deduction

  • What the President signed into law: Section 70102 makes permanent the increased standard deduction from the TCJA and further increases it to $15,750 ($31,500 for joint filers) for 2025, pegged to inflation in future years.
  • Estimated cost: JCT estimates the final provision will cost $205 billion over 10 years when compared to a current policy baseline. Scored against a current law baseline, the cost is estimated at $1.4 trillion.
  • Impact on philanthropy: Increasing the standard deduction means even fewer taxpayers will be eligible for the charitable deduction for itemizers.

Charitable contributions to scholarship-granting organizations

  • What the President signed into law: Section 70411 creates a nonrefundable tax credit for of up to $1,700 for contributions made to section 501(c)(3) public charities that primarily grant scholarships to students attending elementary and secondary schools. The tax credit is available to U.S. citizens and legal residents and limited to cash contributions to these scholarship-granting organizations.
  • Estimated cost: JCT estimates the provision will cost $25.9 billion over 10 years under both scoring methods.
  • Impact on philanthropy: This would create a charitable credit for one specific type of charitable organization, rather than to all section 501(c)(3) organizations. The Council does not have a position, but we support a charitable deduction or tax credit that recognizes all Americans for their giving to all section 501(c)(3) organizations.

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All 501(c)(3) organizations

Recission of tax-exempt status for nonprofits supporting terrorism

  • What the President signed into law: The final bill does not contain a provision that would have changed 501(p) to allow the Treasury Secretary to designate a nonprofit as a terrorist-supporting organization and revoke its tax-exempt status.

Excess Compensation for Nonprofit Executives

  • What the President signed into law: Section 70416 applies the 21% excise tax on compensation exceeding $1 million to all current and former nonprofit employees. The excise tax applies to the amount above the threshold.
  • Estimated cost: JCT estimates this provision will generate $3.84 billion over 10 years under both scoring methods.
  • Impact on philanthropy: We are working with our members and legal experts to better understand the impact.

Changes to Unrelated Business Income Tax (UBIT)

  • What the President signed into law: The final bill does not include changes to UBIT.

Money Account for Growth and Advancement (Trump Account)

  • What the President signed into law: Section 70204 creates tax-preferred Trump accounts. A Trump account is a trust created or organized for the exclusive benefit of a child. Once the child turns eighteen, funds from the account can be used for certain qualifying expenses, including education and the purchase of a home. The account accepts contributions until the child is eighteen up to a maximum of $5,000 (pegged to inflation) a year. Section 501(c)(3) organizations are exempt from the $5,000 maximum annual contribution. However, they are required to provide contributions to one of the following qualified classes: all account beneficiaries who have not yet turned 18; all account beneficiaries under the age of 18 who reside in one or more qualified geographic areas (such as a U.S. state); or all account beneficiaries under the age of 18 who were born in a specific calendar year.
  • Estimated cost: JCT estimates this provision would cost $15.2 billion over 10 years under both scoring methods.
  • Impact on philanthropy: Trump accounts would provide an additional tool for foundations to support children in a given community.

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Other Provisions of Note

Excise tax on investment income of colleges and universities

  • What the President signed into law: Section 70415 adjusts the excise tax on private colleges and universities. Private colleges and universities with at least 3,000 students, the majority of whom are located in the U.S., are subject to the tax. Those with assets:
    • Between $500,000 per student and $750,000 per student would pay a 1.4% excise tax
    • Between $750,000 and $2 million per student would pay a 4% excise tax
    • Above $2 million per student would pay an 8% excise tax
  • Estimated cost: JCT estimates this provision would raise $761 million over 10 years under both scoring methods.
  • Impact on philanthropy: This does not directly impact charitable grantmaking foundations, but it reflects continued skepticism among lawmakers toward endowed funds and the policies and practices for how such funds are distributed.

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