December is the make-or-break month for nonprofit organizations, houses of worship and other charities dependent on Americans’ year-end giving. This year, some Americans are expected to add in some of next year’s gifts, too, since after 2017 charitable spending may come with an extra price.
Religious givers — more generous than the average American — are among millions of donors who face decreased tax incentives on their contributions under the early versions of tax bills in Congress.
That’s bad news for houses of worship as well as local charities that religious givers tend to support as generously or, in some cases, more so than their secular neighbors.
The House and Senate tax plans would roughly double the standard deduction from $12,700 for married couples filing jointly ($6,350 for singles) to $24,000. By shielding the first $24,000 of household income from taxes, it would also dramatically reduce the number of American families who itemize deductions for breaks on things such as medical bills, mortgage interest and charitable deductions.
This change has the potential to affect middle-income families, according to Una Osili, professor of economics and associate dean for research and international programs at the Indiana University Lilly Family School of Philanthropy. She estimates roughly 30 million households making between $50,000 and $100,000 will be less likely to itemize their deductions on their taxes. For those people, their charitable giving will effectively be taxed.
Households whose itemized deductions total less than the new standard deduction would simply take the standard deduction regardless of their level of charitable giving. To claim a tax deduction while they can, Osili said some households may take some of next year’s giving and make donations before the end of this year.
It is difficult to say exactly how these changes will affect particular families. Households at the low end of the range, for example, who give generously, recently bought a home, and also had unusually high medical bills might still itemize. Households at the higher end of the range who give less and have no medical bills or other itemizations may opt for the standard deduction.
SOURCE: Rob Moll
The Washington Post