Charity donations likely to drop next year due to tax law

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 moderateincome 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. 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.

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 fi nd that the deductions they normally take, including for charitable giving, don’t add up to as much as the new standard amount.

The result: some estimates project that as few as 10 percent of taxpayers will continue to itemize deductions on their returns, down from the current one-third.

By contrast, the wealthiest Americans likely will continue to receive the tax benefit of using itemized deductions, including for charitable giving.

Especially for people who currently itemize and donate small to moderate amounts to charities, the tax incentive to give diminishes.

“I think we’ll have some increased donations” this year, says Steve Taylor, senior vice president and counsel for public policy at the United Way. Already, United Way, one of the biggest U.S. charities, has seen some “doubling up” by large donors from what they would normally have been expected to give this year, Taylor said in an interview.

Some 7.2 million people donate less than $1,000 yearly — on average $154 —to the United Way, according to Taylor. “We’re very concerned,” he said. “A lot of charities are in shock.

San Marcos Daily Record

(512) 392-2458
P.O. Box 1109, San Marcos, TX 78666