August 7, 2025

The One Big Beautiful Bill Act, signed into law on July 4, 2025, introduces sweeping changes to federal tax policy, including charitable giving.

From new deduction floors to caps on tax savings, these rules will impact the amount of your donations that are deductible starting in 2026. This article outlines the key changes and offers practical guidance for dentists looking to give strategically under the new law.

New Deduction for Non-Itemizers: A Small Win with Real Impact

If you usually take the standard deduction and don’t itemize, you now have access to a new incentive:

• $1,000 deduction for single filers.
  
  
• $2,000 deduction for married couples filing jointly.
  
  

This applies to donations to 510(c)(3) non-profit organizations (excluding donor-advised funds) and brings back a temporary pandemic-era benefit that had expired.

Example – 24% Tax Bracket, $300,000 AGI, Standard Deduction (Non-Itemized):

• A married couple who do not itemize donate $2,000 in cash in 2026.
  
  
• They now save $480 in taxes (24% × $2,000).
  
  
• In 2025, this donation would have had no tax benefit.
  
  

For Itemizers: AGI Floors and a 35¢ Cap on Deductions

Dentists who itemize will need to clear two hurdles:

• You can only deduct amounts above 0.5% of your AGI.
  
  

• You’ll only get up to $0.35 of tax savings per $1 donated, even if you're in the 37% tax bracket.
  
  

Example – 24% Bracket, $300,000 AGI:

• 0.5% of AGI = $1,500.
  
  
• Total donation = $7,000.
  
  
• Deductible amount = $5,500.
  
  
• Tax savings = $1,320 (24% × $5,500).
  
  
• No cap applies.
  
  

Example – 32% Bracket, $400,000 AGI:

• 0.5% of AGI = $2,000.
  
  
• Total donation = $10,000.
  
  
• Deductible amount = $8,000 (after subtracting $2,000 floor).
  
  
• Tax savings = $2,560 (32% × $8,000).
  
  
• No cap applies.
  
  

Example – 35% Bracket, $600,000 AGI:

• 0.5% of AGI = $3,000.
  
  
• Total donation = $15,000.
  
  
• Deductible amount = $12,000 (15,000 – 3,000 AGI floor).
  
  
• Marginal rate = 35%.
  
  
• No cap applies as is  in the 35% bracket, which is already $0.35/dollar.
  
  
• Tax savings = $4,200 (0.35 × $12,000).
  
  
• Without floor: would have saved $5,250, which is $1,050 less under the new law.
  
  

NOTE: If you’re in the 37% bracket, the same AGI floor applies, but your deduction is capped at 35¢ of tax savings per $1 deducted, regardless of your actual rate.

Example – 37% Bracket, $800,000 AGI:

• 0.5% of AGI = $4,000.
  
  
• Total donation = $20,000.
  
  
• Deductible amount = $16,000 (20,000 - 4,000 AGI floor). .
  
  
• Marginal rate = 37%, but capped at $0.35/dollar.
  
  
• Tax savings = $5,600 (0.35 × $16,000).
  
  
• Without cap or floor: would have saved $7,400, which is $1,800 less under the new law.
  
  

The takeaway is that donating still helps, but it doesn't reduce your tax bill as much, especially for top earners.

Best Practice: Make Donations Personally, Not Through Your Business

The best practice is to make any charitable donations personally, rather than through the practice.

Here's why:

• Business-level donations flow through to your personal return anyway.
  
  
• The 0.5% AGI floor and 35¢ cap apply at the individual level, not business income.
  
  
• Business giving adds complexity but no benefit.
  
  

Giving personally is cleaner, more strategic, and more tax-efficient under the new law.

What Dentists Should Do Now

1. You can still benefit from up to $2,000 in above-the-line deductions if you don't itemize.

2. If you itemize, make sure you clear the 0.5% AGI floor and understand that the tax savings max out at 35¢ per dollar.

3. Always donate personally, not through your dental practice.

The One Big Beautiful Bill Act changes the math on charitable giving. While deductions are still available, they’re more limited and nuanced than before. The most tax-efficient strategy for dentists is to donate from their personal accounts, track their AGI closely, and time larger gifts to exceed the 0.5% floor.

In this new environment, thoughtful planning makes a real difference. When appropriately structured, charitable giving can still support the causes you care about, without sacrificing tax efficiency.

Not sure where to start? Contact us today!

References

1. Council on Foundations. “One, Big, Beautiful Bill: Impact on Philanthropy.” July 8, 2025. https://cof.org.

2. Internal Revenue Service. “Tax Deductions for Working Americans and Seniors.” FS-2025-03, July 14, 2025. https://irs.gov.

3. Rubin, Richard, and Juliet Chung. “Trump Tax Megalaw Upends Charitable Giving.” Wall Street Journal, July 30, 2025. https://wsj.com.

4. U.S. Senate. The One Big Beautiful Bill Act. Senate version, full text. Introduced July 4, 2025. https://www.congress.gov.