Article Written by:
Gennyfer Mullins, CPA
Tax Senior


It seems like lately all eyes have been on the tax reforms proposed by President Trump. People want to know how these reforms will affect themselves, their businesses and our economy overall. What we should also be considering is how these reforms could impact 501(c)3 organizations.

Charities could lose an estimated $13 billion in contributions if the current proposed tax plan goes into action, and that’s only in the first year. It is thought that giving to all types of charities would decrease because of the lack of tax incentive for the donors. What is the solution to this? Charities think reenacting an old tax law that was in effect from 1982 to 1986 could be the solution. This law would allow for an above-the-line charitable income tax deduction that would be available to all taxpayers. This is different from the law we currently have in place, which only allows for charitable giving to be deducted within itemized deductions.

Charities believe this change in law could more than make up for the potential loss of donations, assuming the currently proposed tax plan goes into effect. From an individual perspective, this universal deduction would allow more lower and moderate income taxpayers to take advantage of it, therefore increasing their charitable giving. Does this solution seem too good to be true? Unfortunately, we will all have to wait to see what happens with the proposed tax reforms as well as the proposal of this charitable giving law to find out.

As mentioned above, charitable giving is currently only deductible if the taxpayer itemizes on their return. It is important that only donations to charitable organizations are deducted on a taxpayers return. Please contact your GBQ advisor with any questions.


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