Millions more Americans may eventually donate to nonprofits under new tax rules passed last summer, but the same changes are also expected to pull down total charitable giving dollars, according to new research. The report, published Tuesday by Indiana University’s Lilly Family School of Philanthropy, projects a split outcome: more donors overall, but smaller aggregate gifts.
The findings center on how U.S. charitable giving is “top heavy,” meaning the largest donors and corporate donors have outsized influence on overall trends. Jon Bergdoll, interim director of data and research partnerships at the school and the lead for the study, said the new law’s mix of incentives and limits plays out unevenly across income levels and tax situations, shaping both participation rates and how much money changes hands.
The researchers estimated that new charitable deductions available to most filers would encourage between 6 million and 8.7 million additional Americans to donate to nonprofits over time. Bergdoll also said it may take a while for households to learn about the new deduction, adding that behavior changes will depend on whether people become aware of the benefit and where nonprofits focus their outreach.
For the study’s overall dollar projections, the report anticipates a drop in gifts to nonprofits of about $5.6 billion annually. Bergdoll cautioned the effects would not necessarily arrive right away, arguing that other macroeconomic forces could matter more for the total donated in 2026 than the changes in the One Big Beautiful Bill.
“Giving I could imagine going in so many different directions this year,” Bergdoll said. “And so this is not saying, ‘Giving will absolutely go down in 2026.’ It just there’s this little extra weight dragging it down.”
A decline of $5.6 billion would amount to less than 1% of the $592.50 billion given to nonprofits in 2024, according to Giving USA, the report said. The Treasury Department did not respond to a request for comment about the impact of the new tax law on charitable giving.
The main change expected to increase participation is a new charitable deduction of up to $1,000 for individuals and $2,000 for married couples. Bergdoll said the deduction is aimed at most tax filers who take the standard deduction—about 87% of people—and therefore do not itemize their taxes.
The law also includes rules that the researchers said would likely reduce giving from high-income households. For wealthy donors who itemize, the One Big Beautiful Bill lowers the cap on the overall deductions the wealthiest taxpayers can claim: donors in the highest bracket would be limited to total deductions of 35% of their income, down from 37% previously. Bergdoll said the effect is large largely because top marginal income households account for a substantial share of giving.
In addition, the bill creates a new floor for tax benefits for itemizers. Under the new rules, those households must give more than 0.5% of their income to nonprofits to claim a deduction; if gifts fall below that threshold, the donor would not receive a tax benefit.
Corporate giving is also expected to change, though the researchers projected a smaller decline than some earlier expectations. The One Big Beautiful Bill sets a new floor on corporate charitable donations at 1% of pretax profits, meaning companies giving less than that would not be able to take a charitable deduction for the gifts. Bergdoll said the Lilly School research projects corporate giving will fall by around $1.5 billion annually, but that would be less than the amount the researchers had expected.
Bergdoll said there is limited comprehensive data on corporate giving at the company level. To estimate the impact, the study drew on findings from Chief Executives for Corporate Purpose (CECP), which Bergdoll said suggested that most charitable donations come from companies that already give above the new 1% threshold. Sheila Bravo, president and CEO of the Delaware Alliance for Nonprofit Advancement, said that large businesses she speaks with in Delaware did not anticipate that corporate giving would be directly affected by the deduction floor, and cited other factors such as rising costs, uncertainty in the business environment, and internal corporate decisions about charitable giving.
Bergdoll said the projections reflect the most likely outcome from the law changes rather than a precise forecast, and that in every scenario the researchers examined, overall giving was likely to decline. “At the very worst of things, we see giving dropping by almost $12 billion,” he said. “And at the lighter end of things, we see giving dropping by about $2.5 billion.”