Congressional efforts to overhaul the tax code could have major implications for charitable giving and non-profit budgets. The proposed tax plan calls for doubling of the standard deduction, which would make it less likely for taxpayers to choose to itemize deductions. A married couple would need deductions to exceed $24,000 to make itemizing worthwhile for them.
Studies show that this would result in the number of itemizers dropping by 30 million, which is critical because people who itemize their deductions account for 82% of all charitable contributions. This would lead to a loss of $13 Billion (6%) in contributions every year. A 6% loss in giving to non-profits, such as the Hydrocephalus Association, means a 6% budget cut. This could lead to reductions in research, advocacy, outreach, and other services.
Some organizations have called upon Congress to add a universal charitable deduction to the proposed tax plan, which would allow all taxpayers to utilize a charitable deduction, regardless of whether they itemize or not. This could increase giving by $5 billion each year, which would overcome the damaging effects that result from changes to the standard deduction.
Your team at the Hydrocephalus Association is working with non-profits from around the country to ensure that the tax code continues to provide strong incentives for charitable giving.