The One Big Beautiful Bill Act (H.R. 1)

Note: This summary reflects our best understanding as of July 2025 and will very likely evolve as Treasury issues implementing regulations. Always consult a tax professional or legal advisor before acting on these provisions.

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A practical guide for nonprofits, donors & schools
Signed July 4 2025

1 — 30-Second Take-Away

Winners	Losers
Small-dollar donors – permanent $1 000 / $2 000 above-the-line deduction (starts 2026)	High-income donors – 0.5 % AGI floor and Pease cap cut top benefit from 37 ¢ → ≈ 35 ¢
K-12 SGOs – $1 700 credit redirects gifts their way (2027)	Corporations whose giving is < 1 % of taxable income – first dollars no longer deductible
Treasury – larger excise haul from elite endowments & $1 M+ pay packages	Elite universities – endowment tax tiers leap to 4 % / 8 %

2 — Individual Giving Rules (apply to 2026 returns and after)

Provision	Old Law	New Law	Practical Impact
Above-the-line deduction (non-itemizers)	Expired 2021	Up to $1 000 / $2 000 cash gifts; no DAFs	Promote in every mass appeal
0.5 % AGI floor (itemizers)	None	Only gifts above the floor deductible	Encourage bunching / DAF front-loads
Pease-style cap (§ 68)	Suspended since 2018	Flat 5.4 % haircut → top benefit ≈ 35 ¢ per $1	Show after-tax cost in proposals
60 % AGI cash limit	Sunsetting 2025	Permanent	Keeps “mega-gift” ceiling high

Editor’s View: The New Pease Squeeze

Velvet-glove pickpocket … donors still feel generous; Treasury quietly skims 5 %.
Two-cent sting … a seven-figure pledge now loses ~ $20 000 of tax value.
Floor and cap … one rule pushes gifts up; the other shaves them down.
Optics over outcomes … lawmakers “help charity” while redirecting big-gift dollars.
Complexity kills … every extra spreadsheet tab risks a cooled pledge.
Fundraiser mantra … lead with mission, follow with tax – or watch the biggest checks vanish.

3 — Corporate Giving

New Rule	Detail	Fund-Raising Angle
1 % taxable-income floor	Gifts below 1 % aren’t deductible; 10 % cap & 5-year carry-forward remain	Target firms already over 1 %; front-load multi-year sponsorships

4 — $1 700 K-12 Scholarship Credit (2027)

Non-refundable 100 % credit, max $1 700 per taxpayer, for gifts to state-certified SGOs
Student eligibility: ≤ 300 % of area-median income
States may opt in or out

Tip: If your mission touches education equity, partner early with SGOs before donor dollars migrate.

5 — University Endowment Excise Tax

Assets per student	Rate
$500 K – $750 K	1.4 %
$750 K – $2 M	4 %
> $2 M	8 %

Tax base widened – includes student-loan interest & federally funded IP royalties
Annual IRS/Treasury report starts 2026
Action: Stress-test endowment draw; consider donor-designated quasi-funds

6 — Non-Profit Executive Pay

The 21 % excise now hits every current / former employee earning > $1 M – not just the top five. Boards should model costs for physicians, athletics coaches, and golden-parachute packages.

7 — Timeline Cheat-Sheet

Takes effect	Provision
Tax years after 12-31-2025	Corporate 1 % floor • Expanded § 4960 pay tax • University tiers/reporting
2026 return	Non-itemizer deduction • 0.5 % AGI floor • Pease cap
2027 return	$1 700 scholarship credit

8 — What Got Cut

Higher private-foundation excise tiers
UBIT on parking & name/logo royalties
Mandatory DAF payout
§ 501(p) fast-track revocation power

All removed in conference.

9 — Immediate To-Dos

Refresh appeals – trumpet the $1 000 / $2 000 write-off.
Bundle big gifts – DAF front-loads or multi-year pledges to leap the 0.5 % floor.
Re-price sponsorships – structure giving so firms clear the 1 % floor.
Audit comp – flag anyone likely to cross $1 M (including deferred payouts).
Model endowment tax – brief trustees on 4 % / 8 % scenarios.

How This Information Was Assimilated

Benchmarked Industry Commentary
We began by reviewing how top financial firms and policy experts interpreted the bill, identifying trends, blind spots, and inconsistencies.
Analyzed the Bill Directly Using AI
We procured the full legislative text and ran it through three separate AI systems—each tasked with analyzing the document twice for clarity, contradictions, and key takeaways.
Compared AI Output Against Human Commentary
We cross-checked the AI-generated insights against the financial industry’s interpretations and refined the content where necessary to enhance clarity, accuracy, and practical use.
Human Oversight and Synthesis
Finally, experienced human reviewers interpreted, contextualized, and refined the output for nonprofit relevance and actionability.

Note: While we’ve aimed for precision, minor discrepancies may exist. Purely human interpretations often introduce greater variance—and occasionally, unintentional opinion masquerading as fact.

Viken Mikaelian

Viken Mikaelian is the CEO of PlannedGiving.com, Major Gifts LLC and Philanthropy.org — the resource for all your major and planned giving marketing needs. Viken is available for speaking engagements on planned giving marketing, personal development and time management. Connect with Viken on LinkedIn.