Friday, December 29, 2017

Charity Donations Likely To Drop Next Year Due To New Tax Law

By MARCY GORDON Published DECEMBER 28, 2017 12:53 PM

WASHINGTON (AP) — In this season of giving, charity seems to be getting an extra jolt because next year the popular tax deduction for donations will lose a lot of its punch.

Traditionally generous Americans may have less incentive to give to charitable causes next year because of the newly minted tax law. The changes that will make it less advantageous for many people to donate to charity in 2018 may be sparking a year-end stream of fattened contributions in anticipation, charity executives and experts say.

Starting next year, the millions of relatively small donations from moderate-income people to mainstream charities could be sharply reduced, they say. That means charity could become less of a middle-class enterprise and a more exclusive domain of the wealthy, who tend to give to arts and cultural institutions, research facilities and universities. Their use of the charitable tax deduction is less likely to be affected by the new law.

The sweeping Republican tax overhaul, delivered by the GOP-dominated Congress and signed into law by President Donald Trump, doesn’t eliminate or even reduce the deduction for donations to charitable, religious and other nonprofit organizations. Charitable giving should be encouraged with a tax incentive, congressional Republicans crafting the plan said early on, and the cherished deduction — though costing some $41.5 billion a year in lost federal revenue — wasn’t struck even as other longstanding deductions fell or were scaled back.

But it might as well have been, charity experts and advocates say.

A central pillar of the massive tax law doubles the standard deduction used by two-thirds of Americans, to $12,000 for individuals and $24,000 for married couples. That means many taxpayers who now itemize deductions will find it’s no longer beneficial for them do so. They’ll find that the deductions they normally take, including for charitable giving, don’t add up to as much as the new standard amount.

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http://talkingpointsmemo.com/news/charity-donations-drop-tax-law

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