MPC supports the Charitable Deduction & the Charitable Act

Since 1917, the federal charitable tax deduction has provided a tax deduction for donations made to nonprofit organizations by taxpayers who itemize their tax returns. The 2017 Tax Cuts and Jobs Act made several changes that hurt the effectiveness of the charitable deduction. By increasing the standard deduction, it greatly reduced the number of taxpayers who itemize and therefore have access to the charitable deduction. Under current law, more than 90% of taxpayers don’t itemize, meaning less than 10% of taxpayers have a tax incentive to increase their donations to important causes.

In March 2020, Congress enacted a $300 charitable deduction for cash gifts from nonitemizers for 2020 and in December 2020 extended its availability through 2021 and increased the cap to $600 for joint filers. Thereafter, the number of small gifts – especially those of $300 and $600 – saw a significant increase before collapsing once the deduction expired at the end of 2021.

Charitable giving dropped 10.5 percent in 2022, only the fourth time donations have fallen since 1956. Additionally, charitable giving as a share of personal disposable income dropped to 1.7 percent – a near 30-year low.

Sourced from the United Philanthropy Forum