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What Tax Code Changes Mean for Your Charitable Giving

All the talk about the changes in the tax code probably has you wondering: what do these changes mean for me? And: how can I give wisely? Here are some ideas to help you.

Over the last few months, there has been a lot of discussion about the changes in the tax code and what that might mean for charitable giving. You may have heard that the new tax laws will harm nonprofits and possibly reduce charitable giving. This has many donors wondering: what do these changes mean for me? And: how can I give wisely with these changes in place?

While some of the changes could have negative consequences for charitable giving, that’s not the whole picture. In fact, certain changes may actually increase the benefits of charitable giving, particularly for people in higher income categories. As you are planning your charitable giving, here are some things to keep in mind:

Itemizing deductions. The charitable deduction is still in place for those who itemize their deductions. The standard deduction has been raised to $24,000 for joint filers and $12,000 for individual filers. Up to $10,000 of state and local income and property taxes can still be deducted as can mortgage interest. This means that many donors from upper-middle and high-income households could still itemize. Others may plan to itemize every other year by timing charitable donations and claim the standard deduction in the other year.  A donor advised fund is a useful vehicle to accommodate the timing of charitable donations.

Other Changes Affecting Giving. The limit for charitable deductions has been raised from 50% to 60% of adjusted gross income. The phase out of itemized deductions for high-income earners was repealed. No changes were made for gift annuities or charitable remainder trusts. Givers can also still donate appreciated stock and avoid capital gains taxes, even if they don’t itemize. And givers that need to take required minimum distributions (RMDs) can still donate up to $100,000 tax free from IRAs.

Research confirms that while tax deductions affect charitable giving, they are only one of many factors that influence it. Most donors give because they recognize the good work an organization is doing and want to be part of making a difference in their communities. Of course changes in tax laws don’t change the needs that exist or the impact you can make by supporting an organization that is meeting those needs.

RSM has graciously agreed to provide more information about giving under the new tax laws to our donors. Please follow our blog  for more information soon.