On July 4, 2025, President Trump signed into law nearly 900 pages of legislation referred to as the “One, Big, Beautiful Bill Act (OBBBA).” The impact of the new law upon churches and not for profits will be significant and the topic of a separate conversation. For most, the information in the bill is difficult reading and potentially challenging to comprehend. With that in mind, there are Four Big, Beautiful Opportunities for local churches to disciple their givers in the area of Stewardship and Generosity related to the changes in tax law.
1. The Opportunity for the 10% of Americans Who Itemize
OBBBA caps the tax benefit at $0.35 for each dollar of itemized deductions rather than the $0.37 per dollar previously received by taxpayers in the top tax bracket.
In addition, it creates 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. For example, if a person has an Adjusted Gross Income (AGI) of $100,000, the first $500 of contributions would be ineligible.
Finally, OBBBA makes permanent the Tax Cuts and Jobs Act’s (TJCA) increased contribution limit of 60% of AGI for cash gifts made to qualified charities for taxpayers who elect to itemize.
Obviously, any limits to the charitable deduction may adversely impact churches, which rely on the generosity of everyday Americans. However, making permanent the expanded charitable deduction for itemizers would continue to incentivize charitable giving at a time when ministries are in critical need and increasingly dependent upon top givers.
Action Step:
- Communicate the creative opportunities available to this segment and encourage them to make gifts from non cash assets versus gifts from income. Many non cash gifts from wealth can help givers with tax deductions as well as provide capital gains tax avoidance on highly appreciated assets. Contrary to assumptions, these opportunities are not necessarily familiar to sophisticated wealth holders.
2. The Opportunity for The 90% of Americans Who Take the Standard Deduction
The new law makes permanent the increased standard deduction from the TCJA and further increases it to $15,750 ($31,500 for joint filers) for 2025, adjusted to inflation in future years, decreasing the likelihood of itemized tax filings.
For tax years beginning January 1, 2026, the law creates a permanent deduction for taxpayers who do not itemize, capped at $1,000 ($2,000 for joint filers). This excludes contributions to donor-advised funds (DAFs).
Positively, the bill recognizes a broader swath of Americans for their giving, although increasing the standard deduction means even fewer taxpayers will be eligible for the charitable deduction granted to those who itemize.
Action Steps:
- Since the elevated standard deduction eliminates tax deductions as an extrinsic incentive, churches need to focus on intrinsic motivations and be intentional in telling the story of the dollar for dollar impact that is the direct result of giving in offering moments, sermons, the website giving page, and email communications.
- For those who would like to itemize but fall short of the mark, churches can educate givers about how to use a Donor Advised Fund to implement a gift bunching strategy which would allow givers to itemize every other year.
- Educating those who are 70.5 years old about the benefits of giving from their IRA, including any Required Minimum Distribution (RMD). There are two reasons. First, giving before or beyond RMDs is still tax advantaged. It's earned income that now will never be taxed. Second, you actually need to convert 401(K), 403(B), etc., to an IRA Rollover before the year when you have RMDs, otherwise you can't avoid the RMDs for that year of conversion. Givers should convert the account before age 73.
3. The Opportunity for Those Who Will Benefit from Taxable Income Adjustments
Effective 2025 through 2028, some key tax deductions for working-class taxpayers and seniors include:
- No Tax on Tips: Employees and self-employees may deduct qualified tips reported on a Form W-2, Form 1099, or other specified statement up to an annual deduction of $25,000 (for self-employed individuals, the deduction may not exceed the individual's net income from the trade the tips were earned). The deduction is phased out for single taxpayers with an Adjusted Gross Income over $150,000 ($300,000 for joint taxpayers).
- No Tax on Overtime: Individuals who receive qualified overtime payments reported on a Form W-2, Form 1099, or other specified statement may deduct up to $12,500 annually ($25,000 for joint filers) in overtime pay. The deduction is phased out for single taxpayers with an AGI over $150,000 ($300,000 for joint taxpayers).
- No Tax on Car Loan Interest: Individuals are allowed to deduct interest paid on a qualified, personal vehicle up to $10,000 annually. The deduction is phased out for single taxpayers with an AGI over $100,000 ($200,000 for joint taxpayers). To qualify for this deduction, the interest must be paid on a loan that is: (1) originated after December 31, 2024; (2) used to purchase a personal vehicle for the taxpayer; and (3) secured by a lien on the vehicle.
- Deduction for Seniors: Individuals who are age 65 and older may claim an additional deduction of $6,000. This is in addition to the current standard deduction that seniors are able to claim under existing tax law. The $6,000 senior deduction is per eligible individual ($12,000 per eligible couple). The deduction is phased out for single taxpayers with an AGI over $75,000 ($150,000 for joint taxpayers).
Action Steps:
- Churches should consider acknowledging the additional disposable income of these beneficiaries in order to offer financial literacy classes as an opportunity for givers to improve their financial health, including budgeting, money management, debt retirement, savings and financial planning.
- Simultaneously, there is an opportunity to challenge these givers to take one step forward in their giving: from occasional giving to regular giving, and then to percentage giving.
4. The Opportunity for High Net Worth Givers Who Hold Assets in Excess of $30 million.
For affluent taxpayers updating financial and estate plans, the last couple of years have been a roller coaster because of the possibility that the TCJA's increase to the estate tax exemption would sunset at the end of 2025. However, the new law makes permanent the increase for the exemption threshold. The 2025 exemption is $13.99 million for single filers and $27.98 million married filing jointly. In 2026, these numbers increase to $15 million and $30 million respectively.
While estate tax-based incentives to give to charity continue to apply only to high net worth givers, most people in this demographic give to charity during their lifetimes and in their estates for motivations beyond a tax benefit as they seek to cement their personal legacy for future generations.
Action Steps:
- As families work with their tax and estate planning advisors, many are viewing the next two years as an important window to plan ahead. The upshot of the new law is that high-net-worth taxpayers now have more time to thoughtfully consider estate planning strategies, including legacy giving. It would be wise for church leadership to focus on enhancing givers’ personal and spiritual legacies by developing long-term planned giving strategies.
- Givers should consider beneficiary designations on IRA or 401(K) accounts because any portion of those given to family members will trigger ordinary income tax from the first dollar.
Next Steps
It goes without saying that some of these strategies will overlap depending on the individual giver. For example, every giver should have an estate plan, and many givers have appreciated assets that would provide a tax advantaged gift.
Our commitment at MortarStone is to equip churches with the tools, insights and thought leadership to face these realities. Now, more than ever, churches need to utilize data analytics to understand the composition of their givers and strategize to meet the needs of each segment. MortarStone is here to help! If you would like to schedule a free, 30 minute consultation to discuss these strategies in light of your ministry context, contact me at tim.deatrick@mortarstone.com.