7
Key Changes in Tax
Law for Individuals
The Tax Cuts and Jobs Act reduced the tax rates of most tax
payers, so the average U.S. household will have more
disposable income to spend and give in 2018. That's good
news for the nonprofit industry.
It increased the amount of charitable giving itemizers can
deduct. Up to 60% of AGI can be given (up from 50%), so
wealthier donors who itemize can now write off even larger
contributions.
Tax reform also dramatically increased the standard
deduction amount for all categories of filers. For example, a
married couple filing jointly will now enjoy a standard
deduction of $24,000 per year―up from $13,000.
Tax Law
Source: Ryan Ellis, " Nine in Ten Will Claim The Standard Deduction Under Tax Reform According To New White House Study," Forbes, November 22, 2017.
In the past, about one-quarter of households itemized
deductions, but in the future, the government expects less
than 10% will itemize.
This is the source of concern for nonprofits: with fewer people
itemizing charitable deductions, will giving decline? It is
unlikely to make much difference. The majority of donors
were not ever itemizers. Most are not wealthy. And as we will
soon discover, tax deductions have little or nothing to do with
why they give.
The heart of the matter: mission and impact matter more to
donors than tax deductions.
Itemizers
Charitable Deduction Increased to 60% of AGI
Non-Itemizers
Standard Deduction Increased
