Could charitable giving become a tax law casualty?

March 26, 2019

By Jessica Dickler and Katie young on CNBC on March 23, 2019

People don't necessarily give to charity because of tax benefits, but it doesn't hurt.

However, the new tax law, among other things, has eliminated or sharply reduced the benefits of charitable giving for many would-be donors.

Even though the deduction for donations is unchanged, you still need to itemize to claim it, and that's a much higher bar with the now nearly doubled standard deduction.

Under the new law, an individual will need total itemized deductions to exceed $12,000, the new standard deduction for individual taxpayers, up from the former $6,350 standard deduction. Married couples would need deductions exceeding $24,000, up from $12,700.

As a result, fewer people will likely itemize this year, which means many won't reap the tax benefits of their charitable contributions.

One analysis from the Tax Policy Center found that 21 million taxpayers will stop taking the charitable deduction under the Tax Cuts and Jobs Act. Not only did the number of taxpayers itemizing shrink, but lower tax rates reduced the marginal benefit of giving, as well, the Tax Policy Center said.

Troubling signs

That could put a damper on some people's charitable spirit.

That's particularly troubling for grassroots charities such as the Community Partnership School, a brand-new independent school located in one of Philadelphia's most disadvantaged neighborhoods.

Student enrollment is made possible almost entirely by charitable donations, which cover about 95 percent of the school's operating budget.

"Whether it's $1 million or $10 — it all matters, that's how we fund the school," said Eric Jones, the head of school.

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