‘Tis the season for giving—especially if you’re trying to squeeze in some charitable tax breaks for 2018.
Nonprofits may not see the influx of revenue they’re used to, however, as the Trump administration’s Tax Cuts and Jobs Act eliminated many incentives for giving.
To gain more tax breaks via itemized charitable donations, individuals and couples need to give more than the standard deduction. But under last year’s new tax law, the standard deduction for singles nearly doubled, rising from $6,350 to $12,000. For married couples, the standard deduction rose from $12,700 to $24,000.
The Tax Cuts and Jobs Act also capped the state and local tax deduction at $10,000 and eliminated other itemized deductions.
“Without itemized deductions, most people will lose all tax benefits associated with charitable giving,” Kimberly Dula, a partner at the New Jersey accounting firm Friedman LLP, told CNBC.
The Tax Policy Center estimates that the number of households claiming an itemized deduction for charitable gifts will drop from 37 million to about 16 million this year. Other research from economist Patrick Rooney estimates households will donate $13.1 billion less each year due to the tax cuts.
This could affect the country’s nonprofit organizations, who receive a large portion of their donated revenue from individuals. According to Giving USA, individuals gave 70% of the $410 billion donated to charity in 2017.
