The Pentera Blog
Nonprofits Are Urging Congress to Address the Expired Nonitemizer Charitable Deduction
The expiration at the end of 2021 of a popular tax deduction for charitable giving has spurred lawmakers and nonprofit leaders to seek something comparable by year end.
The $300 ($600 for couples) deduction for individuals who do not itemize on their tax returns encouraged important philanthropic giving in 2020 and 2021, according to lawmakers and nonprofit leaders participating in a U.S. Senate Committee on Finance hearing earlier this year. The expiration of that provision leaves nonprofits facing a possible decline in donations, especially from lower- and middle-income individuals who no longer itemize.
The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction, leading tens of millions of taxpayers to stop itemizing on their returns. According to the IRS, the percent of taxpayers who itemize fell from about 30% in 2017 to around 11% in 2018.
Addressing this and other challenges, nonprofit leaders testified before the Senate Finance Committee on March 17 in Washington, D.C.
"Every day that this lifeline remains expired is a blow to our charitable recovery and a missed opportunity for those in need," testified Daniel Cardinali of the Independent Sector, a national charitable organization.
"While total charitable giving has been increasing during the pandemic, we have to be concerned about post-pandemic giving patterns by Americans of all income backgrounds," added Una Osili of the Indiana University Lilly Family School of Philanthropy, who also addressed the committee. "A growing body of work has examined the effects of extending the charitable deduction to nonitemizers. Results indicate that a nonitemizer charitable deduction could increase charitable donations and induce an expansion in the number of donor households," she said.
Senators, notably James Lankford of Oklahoma, spoke in favor of restoring and expanding the deduction for nonitemizers. Lankford noted that many charities reported receiving $300 gifts on the final day of 2021, the exact amount needed for taxpayers to receive the deduction.
You can watch the full Senate hearing here.
