How Congressional Tax Proposals Could Impact Charitable Giving—And How Gudsy Would Help

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Tax reform legislation, its impact on giving, and Gudsy's value proposition.
Gudsy Team

Gudsy Team

June 27, 2025

As Congress debates major tax reforms in 2025, nonprofit leaders and donors are closely watching proposed changes that could reshape the landscape of charitable giving. Legislative proposals currently under consideration—such as the “One Big Beautiful Bill” and related measures—could have significant consequences for how and why people support causes they care about.

Key Legislative Changes and Their Implications

  • Cap on the Tax Benefit for Itemized Deductions:
    Both the House and Senate versions of major tax bills propose capping the tax benefit of itemized deductions—including charitable gifts—at 35 cents per dollar, down from the current top rate of 37 cents for the highest earners. This change would reduce the financial incentive for high-income individuals to make large charitable contributions.
  • New 0.5% Floor for Itemized Charitable Deductions (Senate Proposal):
    The Senate draft would require itemizers to give more than 0.5% of their adjusted gross income before any charitable deduction is allowed. This could eliminate the tax benefit for smaller gifts by those who itemize, potentially discouraging giving at the margins.
  • Increased Standard Deduction and SALT Cap Changes:
    The House bill would make the higher standard deduction permanent and further increase it temporarily. This will likely reduce the number of taxpayers who itemize, shrinking the pool of donors incentivized to give by the tax code.
  • 1% Floor for Corporate Charitable Deductions:
    A new requirement in the House bill would require corporations to donate at least 1% of their taxable income to qualify for a charitable deduction. Many corporations, especially small businesses, do not reach this threshold and would lose their deduction entirely.

These legislative changes, if enacted, could lead to a reduction in charitable giving, particularly among those who are primarily motivated by tax incentives.

Historical Precedent: The 2017 Tax Cuts and Jobs Act (TCJA)

The most recent and significant precedent for such changes is the 2017 Tax Cuts and Jobs Act (TCJA), which dramatically altered the tax incentives for charitable giving.

  • Decline in Charitable Giving:
    Research from Indiana University and the University of Notre Dame, published by the National Bureau of Economic Research (NBER), found that U.S. charitable giving fell by about $20 billion in 2018—the first year of TCJA’s implementation. This drop was primarily due to the law’s near-doubling of the standard deduction, which prompted about 23 million households to switch from itemizing their charitable deductions to taking the standard deduction. Among these households, charitable giving decreased by an average of $880 per year. The researchers estimated that about $16 billion of this decline was a permanent annual drop caused by TCJA[1][2][3].
  • Reduction in Itemizers:
    The TCJA led to a 57% decline in taxpayers claiming the charitable deduction, with nearly 20 million fewer itemizers between 2017 and 2018. This meant that far fewer people received a tax benefit for their charitable contributions[4][5].
  • Differential Impact:
    The decrease in giving was most pronounced among organizations focused on basic needs, arts, culture, and the environment. Religious congregations saw little to no change in giving, likely because their donors are motivated more by personal and spiritual values than by tax incentives[1][2][3].
  • Re-timing of Gifts:
    Some donors “re-timed” their gifts—moving planned 2018 donations into 2017—to take advantage of the expiring incentives, resulting in a temporary spike in giving at the end of 2017[1][2][6]. However, this did not offset the overall downward trend.

Nuance: Who Will Pull Back and Who Will Keep Giving?

Academic research and legislative analysis consistently show that tax incentives play a significant role in charitable giving—especially among high-income individuals and corporations. When these incentives are reduced or eliminated, these groups are likely to pull back.

However, research also demonstrates that many donors are motivated by factors beyond tax benefits, such as personal values, social responsibility, and a desire to make a difference in their communities. These donors are less likely to be swayed by changes in tax policy and will continue to support causes they care about, regardless of the financial incentives.

Gudsy’s Value Proposition: Shared Values, Transparency, and Community

At Gudsy, we believe that the most powerful incentive for giving is not a tax deduction, but a genuine connection between donors and the causes they support. Our platform is designed to foster transparency, trust, and lasting relationships—qualities that endure regardless of the tax landscape.

  • Alignment Through Shared Values:
    Gudsy’s mission is to connect supporters with nonprofits that reflect their values and priorities. By making it easy to discover, research, and engage with causes, Gudsy helps build relationships based on shared purpose and mutual respect.
  • Transparency and Trust:
    Gudsy provides clear, accessible information about nonprofits and their impact, ensuring that supporters can make informed decisions and see the results of their generosity.
  • Community as the Connecting Tissue:
    Gudsy serves as the connective tissue between causes and community, offering unified discovery, streamlined engagement, and continuous communication. This approach ensures that both individuals and organizations can easily find, support, and grow together around the causes they care about.

The Bottom Line

While legislative changes may influence the behavior of donors who are motivated by tax benefits, Gudsy’s focus on shared values, transparency, and community will continue to drive meaningful engagement and impact. By fostering authentic relationships and aligning supporters with causes that matter to them, Gudsy helps ensure that the spirit of giving endures—no matter what happens in Washington.

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