Lately many nonprofit leaders have asked me what to expect from the new H.R. 1 legislation signed into law on July 4, 2025. While there is some uncertainty around program funding and how nonprofits carry out their missions, there are also concerns about the impact on charitable contributions in the future. Like many others, I have been researching the new legislation and its likely impact on donors’ support of their favorite causes and charities. Although it’s too early to know the impact of the legislation, I have found there could be a couple positive outcomes for donors and nonprofits.

Individuals who make small to mid-sized donations to nonprofits could be encouraged to increase their philanthropy. Beginning in 2026, tax filers who do not itemize their taxes can deduct more for charitable contributions, up to $1,000 for single tax filers and $2,000 for married couples filing jointly. This may encourage more participation in philanthropy for individuals who make small to mid-size charitable donations. Fidelity Charitable notes that a similar provision was included in the CARES Act during the COVID-19 pandemic in which non-itemizers were able to deduct $300 in charitable contributions. Approximately 90 million taxpayers claimed the deduction in 2020-2021.

The education sector could also see a boost in interest from mid-sized donors. A new nonrefundable tax credit of up to $5,000 or 10% of one’s AGI may be applied if an individual contributes to an organization that provides scholarships to a private or religious K-12 school.

Along with some positive impacts of the legislation, there are some areas of caution related to nonprofit charitable gifts, particularly from large funders. For example, under the new legislation, corporations will only be able to deduct charitable contributions exceeding 1% of their taxable income. This could result in less contributions from small to mid-sized businesses. Larger corporations, however, may look to increase their charitable contributions in the community under the new legislation to make sure they exceed gifts over their 1% income threshold.

For high-income donors in the top 37% tax bracket, the value of itemized charitable deductions will be capped at 35%. This could result in less large donations with a reduced tax incentive at the end. In this case, if you have potential gift asks to your high-income supporters in the near future it may be advantageous to act now so that the contribution may be given  by the end of 2025, before the new legislation takes effect.

Additionally, individuals will only be able to deduct charitable contributions that exceed 0.5% of their AGI. That means a person with an AGI of $60,000 will only be able to deduct their charitable contributions beyond $300. This may encourage individual donors or those with a donor-advised fund to consider a bunching strategy for charitable giving, meaning their intended charitable giving for multiple years is combined into one year to maximize their tax benefits.

To know what works best for each person’s situation, individuals should consult with their financial advisor or tax professional to help them navigate their charitable intent and maximize their tax benefits.

At Amperage, we help nonprofits clearly and compellingly express their needs to their donors and educate team and board members in fundraising and about alternative gift options for charitable contributions. Contact us at amperagemarketing.com/fundraising or mpence@amperagefundraising.com for more information about training your fund development team members or marketing your fundraising needs.

Author Melissa Pence, CFRE, is a fundraising adviser for Amperage Marketing + Fundraising. She has worked in fundraising and development in the nonprofit sector for 25 years.