Sep 22, 2020
Our Charitable Sector Must Continue Fight
Congress has approved the final tax reform legislation. The law will go into effect for the 2018 calendar year.
Where We Are Now
- Unfortunately, the bill is expected to significantly reduce charitable giving to charities, especially giving to charities that rely on middle-class donors. While the charitable deduction is “technically” preserved, significantly fewer people will itemize, thereby limiting the utility of the deduction.
- Overall losses in giving to charities are projected to be in the billions of dollars per year. There were last minute changes to the bill that would have some mitigating impact on losses. Because of the partial restoration of the deduction for state and local taxes, more taxpayers will itemize than the 5% in earlier projections. The increase in itemizers will marginally improve the projected losses.
- There is some good news in that Johnson Amendment repeal language was not included in the bill.
Where Do We Go From Here?
We are expecting that there will be opportunities to revisit the charitable deduction in 2018. There will likely be a couple of legislative efforts to adjust the bill, which is typical after a major rewrite of the law. It can take 3 or 4 years to make necessary adjustments in a new law. United Way Worldwide will continue to work as a network to find ways to restore the charitable deduction and find ways to expand tax incentives for giving.
Collective effort by our sector will be critical. Our best shot is to persuade Senators and Members of Congress that charities in their respective states and districts are being harmed by the tax reform bill.
— Mary B. Sellers, U.S. President, United Way Worldwide
Photo by Lemuel Butler on Unsplash