KPMG article: Navigating the new 1% floor on corporate charitable deductions
Background of section 170, the mechanics of its 1% floor, and options to avoid permanent disallowances of deductions
The One Big Beautiful Bill Act (Pub. L. No. 119-21) imposed a 1% floor on deductions for charitable contributions made by corporations. Under this provision, in tax years beginning after 2025, a corporation will be able to claim a deduction under section 170 for charitable contributions only if, and to the extent that, the aggregate of these contributions exceeds 1% of the corporation’s taxable income. Without planning, this provision could result in corporations suffering a permanent deduction disallowance equal to 1% of their taxable income every year. Corporations that make contributions to charities do, however, have several options at their disposal to avoid that result.
Read an October 2025 article* prepared by KPMG LLP tax professionals that reviews the background of section 170, the mechanics of its 1% floor, and options for corporations that will allow them to avoid suffering permanent disallowances of deductions equal to 1% of their taxable income every year.
*This article appears in Tax Notes Federal (October 20, 2025) and is provided with permission.