Most people lost the ability to deduct charitable contributions on their taxes this filing season, but a new bipartisan bill called the Charitable Act introduced this week helps several Americans.
Charitable Donations In Bipartisan Bill Aims To Help More Americans Deduct On Their Taxes This Filing Season (PHOTO: MarketWatch)
Charitable Donations In Bipartisan Bill
The bill would allow people who take the standard deduction on their taxes the wide majority of families also deduct their donations to charities, religious groups, and other nonprofit organizations. In the 2020 tax year, pandemic-related laws let non-itemizers deduct $300 in cash donations and in the tax year 2021, married couples could deduct up to $600.
The “above the line” charitable contribution deduction expired in 2022, but the Charitable Act’s proposed write-off payments are far more generous for donors. According to the bill’s sponsors, if the bill became law this year, the deduction could be worth more than $4,500 for an individual and over $9,000 for a married couple filing jointly. They include Sen. James Lankford, a Republican from Oklahoma, and Sen. Chris Coons, a Democrat from Delaware.
The deduction amount would be one-third of the standard deduction. That means the size of the proposed write-off would increase over time because it’s tied to the standard deduction. The standard deduction and pay tax brackets are indexed for inflation and adjusted annually. This year, individual taxpayers have a $13,850 standard deduction. One-third of the sum is $4,570 and this year, married couples filing jointly can take a $27,700 standard deduction. One-third is $9,141.
According To IRS Statistics
In the tax year 2021, 90% of more than 154 million individual returns took the standard deduction, according to IRS statistics. During that year, almost 47 million returns used the above-the-line charitable deductions to write off $17.6 billion in contributions, according to IRS data. Along with charitable contributions, itemizers can also deduct costs like mortgage interest, medical expenses, and up to $10,000 in state and local taxes.
People donate because 9they care about underlying causes and organizations, not for the potential tax benefit. But the bill’s sponsors say the legislation hopes to nudge more giving and open up the tax code’s rewards. If passed, the bill would take effect this year. There contain been prior attempts to increase charitable deductions for people who don’t itemize, including a bill Lankford introduced in 2021 and Coons co-sponsored.
According to data from the Association of Fundraising Professionals while charitable giving during 2022’s third quarter improved year over year, the total number of donors contracted again. The third quarter kept the fourth time in five quarters that the number of donors decreased, the organization said. Anything to facilitate more passing is a win while inflation grinds at their operations, nonprofit leaders say.
READ ALSO:
Taxes In 2023: Unemployment Benefits Are Taxable In 2023
$600 Child Tax Credit In Massachusetts Unveiled By Gov. Healey
