Charitable Deduction
The Council strongly supports maintaining the full value of the charitable deduction. As nonprofits know well, the charitable deduction encourages charitable giving by individuals to the benefit of communities across the country. Under the current law, a donor who itemizes their tax deductions can take a deduction on his or her charitable gift at the same percentage as his or her tax rate.
As part of comprehensive tax reform, Congress is considering imposing a cap or limit on the value of the charitable tax deduction as part of an overall effort to either raise additional federal revenue or “simplify” the tax code. The Obama Administration has also proposed a cap on the charitable deduction as part of its President’s Budget each year.
The Council strongly believes that reducing the charitable deduction is not the solution to federal budget concerns. Many communities will deal with residual effects of the recession for years to come, and millions of individuals rely on nonprofit services that are funded by the generosity of individual donors. The nonprofit sector is part of the solution to address both urgent and ongoing needs in communities across the country. Many nonprofits that provide these critical services generate much of their revenue through gifts that the deduction makes possible. We caution lawmakers to consider the consequences for the charitable sector when debating proposals to limit the deduction.
Proposals:
- House Bill H.R. 1 – Tax Reform Act of 2014
- Council Summary of Tax Reform Act of 2014
- President’s Fiscal Year 2016 Budget, with 28 Percent Cap
Council Issue Paper:
Studies on the Impact of Caps or Floors:
- JCT Analysis of Tax Reform Act of 2014
- Tax Policy Center Estimates on Charitable Provisions
- Tax Policy Center Description and Analysis of the Camp Tax Reform Plan
Charitable Giving Coalition:
- The Council actively participates in the work of the Charitable Giving Coalition, a group of national charities, foundations, and member associations dedicated to preserving a century-old American tradition that provides a tax deduction for taxpayers who give to charities. The coalition’s members represent a unified voice to raise awareness among lawmakers in Washington, D.C. about the value of the charitable deduction and its impact throughout America in providing essential community services.