Thursday, November 2, 2017
House Republicans' Tax Bill Preserves Charitable Contribution Deduction, But Will It Be Less Utilized?
According to The New York Times (here and here), Republicans in the House of Representatives release proposed legislation today that would institute some significant changes to the Internal Revenue Code. Although the tax bill preserves the charitable contribution deduction, significant changes to the standard deduction may result in even less taxpayers itemizing their deductions. The proposed tax bill nearly doubles the amount of the standard deduction and eliminates the personal exemption. Presently, approximately 30% of filing taxpayers elect to itemize their deductions. According to the Tax Policy Center, 84% of taxpayers who currently elect to itemize would take the standard deduction as proposed under this bill.
According to The Washington Post, the National Council of Nonprofits warned that charitable deductions will decrease under this legislation as many middle- and upper-middle-class taxpayers would likely not elect to itemize, thus losing any tax benefit of making charitable contributions. Republicans counter that assertion by concluding that such taxpayers should give more to charities due to decreased tax bills. Stay tuned for more response from the charitable sector as well as calculated effect of the proposed change on the charitable contribution deduction.