"Trump's tax law threatens charities. The poor will pay."
We are alarmed by the early reporting showing that the Tax Cuts and Jobs Act or “TSJA” enacted last year has already had a negative impact on giving and that it may only get worse.
One of the problems stems from the new tax law doubling the standard deduction to $24,000 for married couples and $12,000 for single filers. The change is causing fewer taxpayers to itemize their deductions, which has resulted in a drop in donations to smaller nonprofits. Many taxpayers weren’t aware of these changes until recently when filing their 2018 returns, meaning that donations for the upcoming year may very well be much lower.
According to an article written by the Center for Public Integrity this situation “hurts the small- to mid-size charities that offer services to the poor — shelters, health clinics, food banks and childhood services — and that generally rely on givers who aren’t that well off.”
The Tax Policy Center writes that this isn’t the only change negatively impacting giving, “Overall, the TCJA will reduce the marginal tax benefit of giving to charity by more than one-quarter in 2018, raising the after-tax cost of donating by about 7 percent. It lowers individual income tax rates, thus reducing the value of all tax deductions; and it caps the state and local tax deduction at $10,000.”
Please feel free to share with us in the comments if your nonprofit is being affected or if you believe will be affected by any of these changes.