Brief Congress’s New Two-Tier Charitable Deduction: More Complexity, Weaker Incentives
C. Eugene Steuerle, Robert McClelland, Nikhita Airi
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The July 2025 reconciliation bill (also known as the One Big Beautiful Bill Act, or OBBBA) substantially changed and complicated the landscape of tax incentives and charitable giving. We focus here primarily on the main source of confusion: the choice it offers taxpayers between two charitable deductions. In theory, Congress intended this reform to provide a “universal incentive” to all taxpayers, but it largely failed and created a messy system of subsidies.

Tags One Big Beautiful Bill Act (OBBBA) charitable deductions tax incentives
Primary topic Charitable giving
Research Area Charitable giving