What the “One Big Beautiful Bill” Means for Nonprofits
Okay. Deep breath.
Because the One Big Beautiful Bill Act (yes, that’s really what they’re calling it) just became law on July 4th, 2025, after passing the Senate by a hair’s breadth and getting President Trump’s signature during a Fourth of July ceremony.
Freedom, fireworks, and 1,100 pages of legislative changes.
If you’re thinking, “That’s a lot to read between donor meetings and grant deadlines,” you’re right.
Here’s the thing:
This bill means something different to every nonprofit, depending on your mission, your target population, and your funding streams.
BUT, no matter your cause, there are financial and tax implications you need to know about.
Here are some of the biggest impacts:
1. Standard Deduction Increases
The standard deduction is going up to about $16,000 for individuals, which means fewer people will itemize.
Why it matters: Itemizing is what unlocks traditional charitable deductions, so your average donor may no longer see a tax benefit for giving.
**Please note, exact final deduction amounts and thresholds can vary slightly by filing status and final reconciled bill language**
2. New Above-the-Line Charitable Deduction
To soften that blow, the bill adds an above-the-line deduction of up to $1,000 for individuals and $2,000 for couples for cash donations to nonprofits.
Why it matters: This is an opportunity to market giving as accessible to everyone, even non-itemizers.
3. Cap on Itemized Charitable Deductions
High-income donors are getting a tighter cap: 35% of Adjusted Gross Income (AGI) instead of the previous ~37%.
Why it matters: Wealthier donors might feel the pinch, and you’ll want to adjust your major donor strategy accordingly.
4. Scholarship Granting Organization Credits
A new flat tax credit of up to $1,700 for contributions to Scholarship Granting Organizations (SGOs).
Why it matters: If your nonprofit works in education or scholarships, this is prime time to promote those giving options.
5. SALT Cap Increase
The state and local tax (SALT) deduction cap goes up to $30k or $40k, still limited, but a slight relief for some itemizers.
So, what should you do?
· Segment your appeals. Mid-tier donors may care about that $1,000 deduction, while major donors need tailored guidance.
· Educate your supporters. Many donors haven’t heard about these changes, being their trusted info source builds loyalty.
· Highlight scholarship giving if that’s your lane.
· Connect with DAF sponsors. Donor-Advised Funds remain attractive for tax-savvy supporters.
· Remember: While tax incentives are great nudges, donors give because of your impact. Lead with mission, support with tax info.
Sources for this post:
1. AP News
https://apnews.com/article/bf3f94471b13db3e5d50f0cd1f8fe793
2. Philanthropy News Digest (Chronicle of Philanthropy)
https://www.philanthropy.com/article/senate-passes-tax-bill-with-mixed-news-for-nonprofits
3. Kiplinger Tax Analysis
https://www.kiplinger.com/taxes/surprising-senate-tax-bill-changes-to-know
4. Washington Post
https://www.washingtonpost.com/opinions/2025/07/01/trump-democracy-budget-bill-pass/