The near doubling of the standard deduction by the Tax Cuts and Jobs Act is projected to have a negative, albeit unintentional, impact on charitable giving, and Congress is in need of additional data to support the need for a Universal Charitable Deduction to protect givers’ tax incentive.
Several studies have projected that the tax law changes will result in a decline in giving across the board between 4 and 6.5%. This drop will accelerate an already troubling downward trend in giving, threatening the viability of the charitable sector which provides relief for societal issues such as hunger, homelessness, addiction, healthcare, crisis response, and much more.
Introduced last fall by Sen. James Lankford (R-OK) and Rep. Mark Walker (R-NC), the Universal Charitable Giving Act (H.R. 3988, S. 2123), would allow taxpayers who do not itemize their deductions to deduct their charitable gifts up to $4,000 for individuals or $8,000 for married couples.
As the law currently stands, only 5% of taxpayers will be able to claim charitable deductions – a loss of over 20 million givers annually. The Universal Charitable Deduction would ensure that all givers – not just the itemizers (who tend to be in the highest income brackets) – will receive the tax incentives and benefits of giving.
While recognizing the current projections, Congress seeks more data to confirm the urgent need for the Universal Charitable Giving Act. In response, ECFA is researching giving trends with its members and other organizations. Stay tuned to our In the News Page for future updates.