New Tax Laws That May Affect You!
Changes to the tax law under the One Big Beautiful Bill Act (OBBB), may impact your tax planning for charitable contributions to the Catholic Schools Foundation beginning in 2026. How these changes may affect you will depend upon your unique financial circumstances and whether or not you itemize your income tax deductions.
Below are some topics for your consideration to help with your charitable gift and tax planning:
Take Action in 2025: Maximize Your Giving Before New Rules Begin in 2026
Tax law changes are coming in 2026 that will reduce the value of charitable deductions. By giving in 2025, you can maximize your impact and your tax savings before these new limits take effect.
Here’s why acting now matters:
Deduct the full value of your gift in 2025. Starting in 2026, the first 0.5% of your Adjusted Gross Income will no longer be deductible.
Lock in higher tax savings. Donors in the top bracket currently save at 37%, but that benefit will drop to 35% in 2026.
Make the most of your IRA. If you’re 70½ or older, you can use a Qualified Charitable Distribution in 2025 to satisfy your Required Minimum Distribution without increasing taxable income.
Bundle your giving for a bigger impact. Bunching multiple years of donations into 2025 ensures you receive the greatest tax benefit now, while still allowing you to support CSF in future years through a Donor-Advised Fund.
The bottom line: Giving in 2025 means bigger benefits for you and life-changing opportunities for CSF students.
New Tax Laws Starting 2026
For Itemizers (Higher-Income Donors):
New 0.5% Floor: Beginning in 2026, only the contribution value in excess of 0.5% of your contribution base will be deductible.
New 35% limit: Beginning in 2026, the charitable deduction reduces total taxable income, and the dollar value of the deduction will be limited to 35% for donors in the 37% bracket.
For Non-Itemizers (Most Donors):
New Deduction: The OBBB creates an “above-the-line” deduction for charitable contributions from donors who do not itemize their income tax deductions.
Beginning in 2026, non-itemizers will be able to deduct up to $1,000 (single filers) or $2,000 (married filing jointly) directly from their gross income. This is good news for the majority of donors who currently choose the Standard Deduction. However, contributions to donor-advised funds (DAFs) are not eligible for the new non-itemizer deduction.
For Corporations:
New Floor on Deductions: Similar to individuals, corporations will have a 1% floor on their charitable deductions. The corporation will be allowed to deduct only contributions that exceed 1% of corporate taxable income. Corporations may choose to “bunch” contributions by combining multiple years of donations into a single year to meet the 1% threshold.
Estates:
Permanent Higher “Tax-free” Threshold: The OBBB makes permanent and indexes for inflation the higher exemption from Gift and Estate taxes which was set to expire at the end of 2025. This means individuals will be able to pass a total of $15 million in lifetime and estate giving to heirs with no Federal tax.
Overall Impact:
Although the OBBB has introduced some changes, the law still provides generous tax incentives to encourage your charitable contributions. Depending upon your circumstances, you may enjoy significant tax savings with a gift of appreciated securities or a Qualified Charitable Distribution from your IRA. A life income gift can provide a lifetime of income to you along with current tax savings.
Federal Scholarship Tax Credit
Expanding Access to Catholic Education Through the New Federal Scholarship Tax Credit
The One Big Beautiful Bill Act (OBBBA) established a federal tax credit for donations to scholarship-granting organizations (SGOs) that provide funding for students to access tuition assistance and other education-related expenses at K-12 public, private, or charter schools. Beginning in 2027, donors across the country can make a gift to a qualified SGO like the Catholic Schools Foundation and receive a dollar-for-dollar federal income tax credit of up to $1,700, offsetting their tax liability. Each state must opt in to allow SGOs to participate in the federal tax credit program.
Who Can Give?
- Any U.S. taxpayer can donate up to $1,700 annually to an eligible 501(c)(3) SGO and receive a dollar-for-dollar federal tax credit.
- This credit is a direct reduction of your tax owed, making it more valuable than a deduction.
Will Massachusetts Participate?
- At this time, it is not clear whether Massachusetts will opt into the program. Participation depends on the decision by the Governor. CSF is ready to serve more students if the state participates.
- If Massachusetts does not participate, taxpayers are still eligible to claim the tax credit through a qualified SGO in another state.
Who Can Receive a Scholarship?
- Students from households earning less than 300% of their area’s median income (HUD guidelines show this includes roughly 85–90% of households).
- Additional eligibility rules are determined by each SGO.
- Scholarship must be used in the state where the SGO is located.
Is there a limit to how many tax credits are available?
- No. There is no national cap, all qualifying donations are eligible for the credit.
How Are SGOs Approved?
- Governors in each state decide which SGOs are eligible to receive donations and award scholarships. The details of how this will work are not yet defined.
Why give through the Catholic Schools Foundation?
CSF is the largest K–12 Scholarship Granting Organization in Massachusetts. For over 30 years, CSF has led the charge in providing scholarship aid to families, providing in-need students with a high-quality Catholic education. CSF’s strong track record of success, financial transparency, and commitment to student achievement position us as the state’s premier scholarship-granting organization. Your donation will directly help students access a life-changing education.
