The charitable deduction, which provides a tax deduction for contributions to nonprofit organizations, has been in place since it was created in the Revenue Act of 1917. It is available to taxpayers who itemize on their tax returns, which constitutes roughly one-third of all Americans, and its value cannot exceed one-half of an individual’s adjusted gross income.
In light of recent tax reform proposals that would significantly increase the standard deduction while continuing to limit the use of the charitable deduction to those who itemize their tax returns, IS also supports the creation of a non-itemizer deduction for charitable gifts.
Expand the Charitable Deduction
2017 marks the 100 year anniversary of the charitable deduction and it’s time to unlock its full potential for the charitable sector and the communities we serve and represent. Our goal in 2017 is to ensure that every American has an incentive to engage in charitable giving by a federal tax code that extends the charitable deduction to all taxpayers, regardless of their itemizer status.
Independent Sector is working collectively with our partners and members to engage Members of Congress and the new Administration on expanding the charitable deduction to 100 percent of American taxpayers.
With tax reform conversations gaining momentum in Congress and with the Trump Administration, now is the time to reach out to your policymakers to make the case for the universal deduction.
As Congress debates tax reform, let’s urge them to expand the charitable deduction to 100% of U.S. taxpayers. Take a moment to contact your Members of Congress today.
Potential changes to incentives for charitable giving in the tax code have been an ongoing part of deficit reduction and tax reform discussions for a number of years. More recently, tax reform proposals offered by the House Ways and Means Committee and the Trump Administration would retain the charitable deduction. However, additional proposals on the individual side to lower rates and increase the standard deduction would have the unintended consequence of reducing charitable giving.
In the previous Administration and Congress, President Barack Obama consistently put forward a proposal to cap the charitable deduction at 28 percent for high-income taxpayers – and Congressional leaders explored other proposals to establish a hard-dollar aggregate cap or a minimum threshold for claiming itemized deductions.
In September 2012, the Independent Sector Board of Directors adopted Guiding Principles for Public Policy on Charitable Giving. The Principles focus on the role of tax policy in encouraging charitable giving, the importance of sustaining the diversity and independence of the sector, and the sector’s commitment to honor the public trust through transparency and accountability. These Principles will be used to guide IS’s development and assessment of legislative proposals to ensure that America’s strong tradition of charitable giving is sustained and strengthened.
Based upon these Principles, Independent Sector urged Congress to reject proposals that limit the value of itemized deductions for charitable donations, and advocated for policies that encourage Americans to contribute to the charitable causes of their choice by providing tax deductions for their gifts.