If your business operates as a C Corporation, the rules around charitable giving are about to change — and 2025 is your best window to take advantage of the current, more generous tax laws.
Under the One Big Beautiful Bill Act (OBBBA), new limits on corporate charitable deductions go into effect starting January 1, 2026. While these updates are designed to standardize deductions across the board, they’ll hit C corporations hardest, especially those that donate regularly as part of their tax strategy or brand identity.
Here’s what’s changing, how it affects your business, and what smart corporations are doing now to make 2025 their most strategic giving year yet.
What Changes for C Corporations in 2026
Beginning in 2026, OBBBA introduces a new “floor” for charitable deductions, changing how C Corps claim their contributions.
Here’s the breakdown:
Rule
2025 (Current Law)
2026 and Beyond (OBBBA)
Deduction limit
Up to 10% of taxable income
Still capped at 10%
New floor
None
Only contributions above 1% of taxable income are deductible
Carryforward
5 years
Still allowed, but applies only to the portion above the 1% floor
Eligible gifts
Cash, property, inventory, or appreciated assets
Same, but subject to new floor
What This Means:
If your corporation gives less than 1% of its taxable income, none of that giving will be deductible beginning in 2026.
Example:
- If your C Corp earns $1,000,000 in taxable income and donates $8,000, the entire amount falls below the new 1% floor — no deduction allowed.
- If you donate $20,000, only the portion above $10,000 (the floor)—or $10,000—counts toward your deductible limit. With the corporate tax rate at 21%, that means you’d lose $2,100 in tax savings on the first $10,000 that no longer counts toward your deduction.
Who’s Most Affected
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Corporations that make smaller, consistent charitable donations — like sponsoring local events, nonprofits, or community initiatives — will lose out on deductions below the 1% floor.
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Mid-size and large corporations that use philanthropy as part of their tax and brand strategy will need to adjust timing and structure to ensure full deductibility.
Why 2025 Is the Year to Give Big
The current year (2025) still falls under the old rules — meaning you can:
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Deduct up to 10% of taxable income with no floor.
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Claim cash and noncash gifts without restriction on size or minimum thresholds.
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Fully benefit from the deduction in the year you give (with five-year carryforward).
That makes 2025 your last chance to get the maximum tax value from every charitable dollar before OBBBA reshapes the rules.
Strategic Giving Moves for 2025
1. Increase or Accelerate Giving Before Year-End
If you’ve been planning to make charitable contributions, accelerate them into 2025.
By giving more this year, you’ll lock in the deduction before the 1% floor applies.
How it helps you:
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Maximize current-year tax savings.
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Cleanly offset taxable income under the 2025 rules.
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Build goodwill and social impact before the deduction window tightens
2. Donate Appreciated Assets or Inventory
Instead of donating cash, consider giving appreciated property, inventory, or stock.
How it helps you:
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Deduct the fair market value of the asset (subject to normal limits).
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Avoid capital gains tax on the appreciation.
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Reduce taxable income while clearing unused or appreciated holdings from your books.
3. Consider a Donor-Advised Fund (DAF)
If your business plans to maintain long-term philanthropic efforts, contributing to a Donor-Advised Fund in 2025 can secure the full deduction this year while allowing you to distribute donations gradually in future years.
4. Review Corporate Giving Policies
Revisit your internal charitable contribution policies now — especially if you typically give less than 1% of your taxable income annually.
How it helps you:
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Ensures your giving strategy aligns with the new 2026 thresholds.
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Helps you document contributions clearly for IRS substantiation.
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Positions your business to continue giving strategically under new rules.
Takeaway
The OBBBA may change the rules, but smart planning can help you stay ahead. 2025 is the final year to maximize charitable deductions without new limits eating into your benefit.
At Credence Tax Services LLC, I help business owners and CFOs align giving strategies with corporate tax goals — so your contributions make an impact both in your community and on your bottom line.
Let’s plan your 2025 giving strategy before December 31st — and make every dollar count.